CANADA ECONOMICS

NAFTA

The Globe and Mail. 19 Jul 2017. Trudeau urged to lay out NAFTA goals. Opposition parties call on Liberal government to explain to Canadians how they will benefit from trade negotiations. David MacNaughton, Canada’s ambassador to the United States, speaks during a news conference at the Council of Federation meetings in Edmonton on Tuesday. NAFTA: Saskatchewan Premier says Canada should create list of retaliatory measures
STEVEN CHASE, OTTAWA
ADRIAN MORROW, WASHINGTON
KELLY CRYDERMAN, CALGARY

The Trudeau government is facing increased pressure to spell out what Canada hopes to achieve from the renegotiation of the North American freetrade agreement requested by the Trump administration.
Both major opposition parties in the Commons asked the Trudeau government Tuesday to appear before a parliamentary committee as soon as possible to explain Canada’s negotiating objectives.
The United States on Monday released a sweeping list of more than 100 negotiating objectives for NAFTA to overhaul the accord in that country’s favour.
The demands included scrapping the Chapter 19 dispute resolution panels Canada fought hard to secure in trade talks decades ago and that have ruled in Canada’s favour in the past.
Derek Burney, a former Canadian ambassador to the United States who helped negotiate the Canada-U.S. free-trade agreement in the 1980s, said he’s worried there is too much “America first” rhetoric coming from Washington and insufficient talk of how Canada and Mexico would profit from an overhaul of NAFTA.
“If there is no common goal of mutual benefit coming from the top, and it is about unilateral concessions by Canada – and Mexico – then it is not really a negotiation,” he said.
Mr. Burney called on the federal government to justify to Canadians exactly how this redrafting of NAFTA will help this country and lay out what Ottawa wants to achieve from the talks. »
He said the lobbying blitz the Trudeau government and Canadian premiers conducted to build allies among U.S. governors is a good start but Canada needs to be upfront about what it will, and will not, negotiate. “What is the substance of our negotiating position? What are the things we are hearing that we are prepared to negotiate on. Don’t you think Canadians want to hear that?” Mr. Burney said.
Conservative trade critic Gerry Ritz wrote the clerk of the international trade committee asking MPs be allowed to question Foreign Affairs Minister Chrystia Freeland, International Trade Minister François-Philippe Champagne, Finance Minister Bill Morneau and chief NAFTA negotiator Steve Verheul.
The NDP also requested the same hearings. A government official said the Liberals would appear before the committee. The committee of MPs meets Friday to try to set hearing dates.
Under Chapter 19, when one country slaps anti-dumping and countervailing duties on products from another country, the duties can be appealed to the panel rather than to the court system in the country that imposed the penalties. The chapter has been invoked over the years to deal with disputes on everything from softwood lumber to pork to magnesium to beer to cement.
For Canada, Chapter 19 was a way to appeal American attempts to slap duties on Canadian goods without having to appeal to the U.S. court system. For some Americans, however, the entire concept was a ceding of U.S. sovereignty.
U.S. uneasiness with the panels turned to anger after major NAFTA rulings went against Washington. A series of Chapter 19 panels in the early 1990s and mid-2000s found in Canada’s favour on the softwood dispute. In the early 1990s case, the United States’s complaints were exacerbated by the fact that panel decisions broke down on national lines, with Canadian members of the panels ruling in Ottawa’s favour and Americans going for the U.S. Critics contended the panels failed to properly apply the relevant U.S. laws.
The push to scrap the panels has the enthusiastic backing of the U.S. lumber lobby. “The Chapter 19 system is unconstitutional, unworkable in practice, and for decades has seriously undermined the enforcement of U.S. law against unfair trade practices by Canada and Mexico, to the detriment of U.S. industries and workers,” Zoltan van Heyningen of the U.S. Lumber Coalition said in a statement.
Ottawa, meanwhile, indicated it would put up a fight to keep the arbitration panels.
“We think it’s critical to have some kind of a dispute resolution mechanism incorporated – it was in 1994, and it continues to be,” David MacNaughton, Canada’s ambassador to the United States told reporters at a premiers’ conference in Edmonton.
Elliot Feldman, a Washingtonbased trade lawyer who is representing Canadian lumber industry interests in the current softwood battle, said Chapter 19 is necessary for Canadian goods to have access to the American market.
He said there are problems with Chapter 19, but the governments should look to fix the system and improve it rather than throwing it out. For instance, he said, neither Canada nor the United States has maintained standing rosters of potential panel members, meaning it is a more arbitrary process when panellists have to be chosen to hear a dispute. Mr. Feldman said panellists should also be better paid and properly vetted to ensure they have expertise in trade law.
“Chapter 19 has to be, intellectually, the thing Canada cannot give up,” he said. “But it also has to be fixed.”
Mr. Burney said the Americans should be forced to better justify why Chapter 19 is so injurious to U.S. business. “We should not let them get away with unilaterally announcing they will do away with it,” he said.
Meanwhile, NAFTA was frontand-centre in discussions at the summer meeting of Canada’s premiers in Edmonton.
Saskatchewan Premier Brad Wall said Ottawa has done a good job in preparing for major trade talks with the United States, including its engagement with the Trump administration and state offices. However, Mr. Wall said Canada should be prepared for a trade war if negotiations go off the rails. He said Canada should quietly prepare a list of trade areas where it could take some retaliatory measures – if need be.
“Let’s walk softly and carry a big list,” he told reporters Tuesday. “Just know what it is, and understand that we need to be prepared – for something that we don’t want to see happen.”
Earlier in the day, Quebec Premier Philippe Couillard predicted NAFTA talks would drag on for years given the broad list of American objectives. He added there are still many unknowns, including “to what extent does the U.S. want to have an agreement on softwood [lumber] before starting negotiations on NAFTA?”
The premiers emphasized they want to continue their active role in courting a broad range of American lawmakers as part of the Canadian push to highlight the benefits of NAFTA.

The Globe and Mail. 19 Jul 2017. U.S. demands won’t lead to a free-trade nightmare. Senior fellow at the Centre for International Governance Innovation and holds the CN Paul M. Tellier Chair on Business and Public Policy in the Graduate School of Public and International Affairs at the University of Ottawa
PATRICK LEBLOND

On Monday, the United States Trade Representative Office published the Trump administration’s detailed objectives for renegotiating the North American free-trade agreement. Contrary to President Donald Trump’s rhetoric about NAFTA in the past, the objectives document’s overall tone is very much in line with a much-needed modernization of NAFTA.
Notwithstanding some protectionist objectives and measures announced in the document, it’s actually something Canada and Mexico can work with.
For instance, a number of times, the document says the three NAFTA partners must work together to “promote greater regulatory compatibility with respect to key goods [and services] sectors to reduce burdens associated with unnecessary differences in regulation, including through regulatory co-operation where appropriate.” Regulatory and administrative barriers, not tariffs, have become the most important obstacles to trade today, so it makes a lot of sense for NAFTA to establish governance mechanisms to ensure effective bilateral and trilateral regulatory and administrative co-operation.
Enshrining regulatory co-operation within a revised NAFTA would remove the cloud of uncertainty hanging over the existing Canada-U.S. Regulatory Co-operation Council and Mexico-U.S. High Level Regulatory Co-operation Council, which owe their existence to bilateral government memorandums of understanding rather than a legally stronger trade treaty. Hopefully, a renegotiated NAFTA would also ensure there is co-ordination between these two regulatory co-operation bodies.
With regards to sanitary and phytosanitary (SPS) measures, the document indicates the Trump administration wishes to “establish new and enforceable rules to ensure that science-based SPS measures are developed and implemented in a transparent, predictable, and non-discriminatory manner.” It also aims to “establish a mechanism to resolve expeditiously unwarranted barriers that block the export of U.S. food and agricultural products,” which would presumably also apply to Canadian (and Mexican) exports to the United States.
The document also calls for a revised NAFTA to be more transparent when it comes to regulation and other government decisions as called for by businesses and civil society. Similarly, Canada has already committed to improved transparency in the context of the Trans-Pacific Partnership (TPP) and the Comprehensive Economic and Trade Agreement with the European Union.
Moving the pact into this decade, the objectives document mentions free digital trade in goods and services and free crossborder data flows – an issue that did not exist when NAFTA was concluded 25 years ago.
The Trump administration’s willingness to reinforce NAFTA’s existing labour and environmental provisions – including bringing the two-sided agreements into a revised NAFTA text – is certainly good news for the Canadian federal government’s progressive trade agenda.
If the objectives document’s overall language is in line with the expectations for what a modernized NAFTA should look like in order to properly reflect and enhance the North American economy in the 21st century, there are nevertheless some elements that Canada and Mexico will find problematic.
To start, the Trump administration stated its desire to eliminate NAFTA’s Chapter 19, which gives Canada and Mexico more tools to challenge the imposition of antidumping and countervailing duties by the United States, such as in the case of softwood lumber. Otherwise, Canada and Mexico would have to rely on the World Trade Organization for challenging such duties, which would reduce their leverage vis-à-vis the Americans.
The desire to “eliminate the NAFTA global safeguard exclusion so that it does not restrict the ability of the United States to apply measures in future investigations” follows suit. This would mean that when, for example, the U.S. government imposes duties on imports of steel products to protect U.S. steel producers from unfair Chinese competition, Canadian and Mexican steel producers would no longer be exempted as a result of NAFTA.
Finally, the Trump administration wants to “eliminate non-tariff barriers to U.S. agricultural exports including discriminatory barriers, restrictive administration of tariff rate quotas, other unjustified measures that unfairly limit access to markets for U.S. goods.” The main target is likely to be Canada’s supply management in dairy and poultry. However, the document’s language opens the door to reciprocity in that domain. This means that Canada and Mexico will demand the United States also eliminate subsidies and other support measures to American farmers in return for allowing greater access to their agricultural markets to U.S. products.
In all, the much-anticipated objectives document is to be welcomed by Canada and Mexico, since it is definitely something that they can work with. In fact, the document’s language and tone borrows a lot from the TPP, which all three countries have signed on to, even if Mr. Trump later pulled the United States out of it. Notwithstanding some protectionist demands by the United States, which will require the country to give something in return for any Canadian and Mexican concessions, the North American partners now have a genuine opportunity to bring NAFTA into the 21st century and form the basis for an expanding and sustainable North American economy.

The Globe and Mail. 19 Jul 2017. Canada, U.S. eager to lock Mexico into NAFTA energy plan
SHAWN McCARTHY

Trudeau government, Trump administration want to strengthen country’s recent free-market reforms
Canada and the United States are keen to see Mexico enshrine its far-reaching energy liberalization in a revamped North American free-trade agreement, as the three partners look beyond the trade deal to forge a new North American energy strategy.
The Trump administration signalled it is largely content with Canada-U.S. energy relations when it released its goals for NAFTA renegotiations on Monday, but that it wants to “preserve and strengthen” energy-market liberalization that has occurred in Mexico. Key Canadian concerns on energy revolve around President Donald Trump’s frequent commitment to require American-made steel for pipeline projects, and fears in the oil industry that Canadian companies face rising duties as a result of a tougher U.S. approach on “rules of origin” for the diluent that companies need to dilute oil sands bitumen so that the crude can flow through pipelines.
Canadian officials appear optimistic that those potential irritants will be avoided.
Still, Ottawa is eager to shield its industries from any protectionist impulses by reaffirming NAFTA commitments, and reaching a North American strategy on cross-border infrastructure, U.S. treatment of Canadian electricity exports and joint efforts on regulations and innovation.

The Globe and Mail. 19 Jul 2017. NAFTA: Mexico has emerged as a powerful energy market
With a file from Jeff Lewis in Calgary

“It is clear to us that the new administration is seeing energy as a sweet spot in relation to Canada,” a senior federal official said.
Both the Trudeau government and the Trump administration want to bring Mexico fully into the energy chapter of NAFTA to lock in its recent free-market reforms. President Enrique Pena Nieto is facing tough criticism over his liberalization agenda – and a pledge to reverse it – from the leading left-wing candidate to succeed him after next year’s election.
With its market opening, Mexico has emerged as a powerful partner and customer for American – and to a lesser degree, Canadian – energy companies. The government pushed through constitutional reforms to eliminate the monopolies held by state-owned Pemex in the oil and gas sector and by its publicly owned electricity supplier, opening the door for foreign investors.
Oil and gas companies are increasing their exports to their southern neighbour, which is emerging as an important market for natural gas from Texas and New Mexico. Calgary-based TransCanada Corp. is building several gas pipelines in Mexico.
“The administration recognizes that it is in the interests of everyone for a renegotiated NAFTA to maintain the newly found openness in the Mexican market, and to codify the Mexican constitutional energy reforms in any new agreement,” said Jacob Dweck, a Washington-based energy lawyer with Eversheds Sutherland LLP.
One major concern is Washington’s insistence on its right to pursue “Buy America” programs. Mr. Trump reiterated this week his determination to ensure that American steel is used in construction of pipelines in the United States, though it remains to be seen how he intends to enforce that, and whether Canada would win an exemption.
On bilateral energy trade, Canada would like to eliminate some irritants but is more likely to look outside the trade agreement as Natural Resources Minister Jim Carr and U.S. Energy Secretary Rick Perry promote the benefits of a North American energy strategy that would facilitate the deeper integration of markets.
A federal official said the three governments are looking at striking an accord that would commit to co-operation on energy trade and infrastructure; on R&D and innovation; and on regulation including growing concerns over cybersecurity.
Canadian electricity exporters are eager to see a deepening relationship through a North American strategy, but are largely content with the NAFTA provisions.
However, oil and gas producers are facing increasing problems at the border as customs officers take a hard line on rules of origin that govern whether a commodity is allowed in the country dutyfree, or taxed because it contains too much content from non-NAFTA suppliers.
In a submission to the federal governments, the Canadian Association of Petroleum Producers (CAPP) sounded the alarm about “overzealous” customs officers who require importers to verify the source of their crude and the diluent that is blended with the oil sands bitumen.
Importers of Canadian crude face duties when they can’t definitively show the diluent originates in a NAFTA country, according to CAPP, which argues the requirement is onerous. It wants the origin of diluent to be effectively disregarded in a revamped NAFTA, said Nick Schultz, vice-president of pipeline regulation and general counsel with the lobby group.
“What’s happening now is that U.S. customs is expanding their enforcement approach as they’ve found more and more situations where people aren’t providing certificates of origin,” he said by phone. “So we need to find some solution that’s sensible that recognizes that Canada is just not a practical back door into the U.S. for offshore oil and natural gas.”


The Globe and Mail. 19 Jul 2017. Canada will have to play hardball during NAFTA renegotiations. Canada and Mexico don’t have to accept the U.S. position as the basis for the negotiating agenda. Former Canadian diplomat who practises international trade law and is a senior fellow of the C.D. Howe Institute
LAWRENCE HERMAN

So we now know what the U.S. objectives are in the forthcoming North American freetrade agreement renegotiations.
Some of what was sent by the U.S. Trade Representative (USTR) to the Congress on Monday isn’t a big surprise, having been signalled before and in its initial fast-track notice tabled in Congress last May.
There’s a lot about modernizing NAFTA, improving the agreement to add provisions on trade in services, digital commerce, intellectual property and even reference to establishing “strong and enforceable environmental obligations” and other things that, subject to careful reading, could be acceptable as a basis for negotiations.
However, there are at least four major bombshells, signalling an extremely aggressive stance by the Americans, making it difficult for Canada to accept the document as a basis for negotiations.
The first – not unexpected – is the U.S. objective to eliminate the binational panel system in Chapter 19 of NAFTA, the system that was first painfully negotiated in the bilateral Canada-U.S. free-trade agreement (FTA) in the 1980s and later replicated in NAFTA. Canada made many compromises as part of the FTA talks to get the binational panel system accepted by the U.S. side.
For the Americans to now seek its removal is a major assault on a fundamental Canadian interest and could effectively scuttle the talks.
The second attack – also part of the negotiated deal under the FTA/NAFTA – is the U.S. objective to remove all restrictions on “Buy American” preferences at the state and municipal level, including on all federally funded programs for a huge array of local projects.
What the United States is seeking here effectively is a wholesale carve-out of preferential programs that run up against some of the key principles of open trade and General Agreement on Tariffs and Trade-based non-discrimination. Talk about trade distortion: These Buy American preferences will allow it in spades.
The third salvo is the U.S. objective of removing the right of Canada (and Mexico) to be excluded from U.S. safeguard actions against imported goods. Safeguards are global import restrictions that apply when U.S. industries are being injured by an unexpected flood of imports that are neither dumped nor subsidized. Under NAFTA, Canada and Mexico are exempted from such actions unless their exports “contribute importantly” to the injury caused to U.S. producers. The United States wants that out.
The fourth bombshell is the objective to reduce or eliminate barriers to U.S. investments “in all sectors” in NAFTA countries. This is an aggressive demand and suggests the United States wants an end to Canada’s restrictions on American investments in such things as telecommunications, health care, education and cultural industries.
These four areas together comprise an extremely tough set of U.S. objectives that go to the heart of the trading relationship and represent an assault of existing NAFTA rules as far as Canada is concerned, putting the very underpinning of the deal in play.
There are other parts of the USTR notice that could be contentious but possibly less so in comparison with these four items. These stated U.S. objectives alone will make it difficult for these talks to get off to a smooth and friendly start.
I appreciate that some of this may be an overdramatic reaction. Assessing all of this in a less hurried and more deliberate manner will be important. After all, the July 17 document is a statement of ideal objectives on the part of the U.S. government. These don’t have to be taken as diktat or as an end game by either Canada or Mexico. We have to get to the table with the Americans and start some horse trading as the dynamics unfold over the next several months.
The U.S. Congress will also be weighing in on the process. As pointed out in a recent C.D. Howe report, the U.S. Congress over the past several decades has reasserted its jurisdiction in trade matters and will have an important voice in NAFTA negotiations, and possibly a moderating one.
Perhaps some of the more egregious parts of the USTR’s position will be toned down once congressional committees have a look. Canada has been solidifying contacts and enlisting supporters on Capitol Hill that could help to curb some of the most aggressive positions the USTR has tabled.
What also must not be lost in all of this, of course, is that we are talking about negotiations. Canada and Mexico don’t have to accept the U.S. position as the basis for the negotiating agenda. The federal government will have the opportunity to set out its own set of objectives for the talks and Canada can be equally aggressive in making clear to the Americans where its fundamental NAFTA interests lie.
What unfolds over the next weeks and months for Canada-U.S. relations in the long haul will be critical.

The Globe and Mail. 19 Jul 2017. U.S. dropped four bombshells, Lawrence Herman writes
ADAM RADWANSKI

It was too much to hope that the uncharacteristic spirit of cross-partisan co-operation would last.
After Donald Trump’s election victory last November, the federal Liberals and Conservatives decided that just this once – in the face of an unusual threat to Canada’s relationship with its biggest trading partner – they would act like friends.
Rona Ambrose, the interim Official Opposition leader, joined Ottawa’s charm offensive in Washington, aimed at educating or reminding Americans about the relationship’s mutual benefits; true to her word, the Tories resisted attacking the government in ways that could negatively affect looming NAFTA negotiations. Chrystia Freeland, the Foreign Affairs Minister, went out of her way to praise Ms. Ambrose for being so magnanimous. Members of both parties conceded that being united in common purpose was an interesting new experience.
But these are partisans we’re talking about. Once the Conservatives had in place someone to lead them into the next election, there would be less inclination to be charitable than under a placeholder. Whether the opportunity to score points proved too much to pass up, or because of irreconcilable differences in worldview, anything related to Canada-U.S. relations wasn’t going to stay walled off from open debate in perpetuity.
Still, it has been remarkable to witness how rapidly the goodwill has eroded, as tensions over the Omar Khadr settlement have spilled over the border – or, really, been aggressively brought to the attention of the same Americans to whom Canadian politicians were singing from the same songbook.
For the first couple of weeks that controversy raged in Canada over the payout to end Mr. Khadr’s lawsuit against the federal government for failing to uphold his rights as a citizen while he was detained at Guantanamo Bay, there wasn’t much discernible tie-in to current U.S. relations. Stephen Harper personally called Tabitha Speer, the widow of the U.S. Army combat medic allegedly killed by Mr. Khadr in Afghanistan, and Layne Morris, the U.S. soldier wounded in the same firefight, to apologize for Mr. Khadr receiving a reported $10.5-million; an online fundraising campaign affiliated with the right-wing media outlet The Rebel was launched to help raise money for their families. But the federal opposition’s criticism of the deal was aimed at Canadians, and American media took little notice.
That changed on Monday, when the Wall Street Journal published an op-ed by Conservative MP Peter Kent under the headline “A terrorist’s big payday, courtesy of Trudeau,” calling the settlement “an affront … to our U.S. allies.” Quickly it became the day’s hottest story on Fox News, which the Tories encouraged by having another caucus member, Michelle Rempel, go on Tucker Carlson’s evening show.
There are plenty of plausible explanations for why the Conservatives went this route. Their preferred one is that they genuinely want Americans to know they think they’ve been wronged. On Tuesday, some Tories suggested it’s also useful to put a dent in fawning foreign coverage of Mr. Trudeau. They probably figure U.S. attention will help keep the issue, which resonates hugely with their supporters, top of mind in Canada. They may be getting caught up in the thrill of reaching audiences exponentially larger than back home.
Whatever their motives, they broke no established rule. Opinions vary about how much partisanship should normally be set aside when representing Canada abroad. Mr. Trudeau uses the international stage to advance his brand; it’s not crazy for Tories to think they should do likewise.
But in how they’ve chosen to break the cross-border common front, the Conservatives have taken a couple of gambles.
Domestically, they could be overplaying their hand. The Tories clearly believe that, as polls have suggested, a majority of Canadians (including some Liberals) agree with their opposition to the Khadr settlement. If so, there may be more risk than reward in aligning on the issue with U.S. media outlets that can be off-putting to all but hardcore conservatives. It could cause some of those same Canadians to reconsider which side of this debate they want to be on, and create or reinforce negative associations in how they view Andrew Scheer’s party.
And in terms of U.S. politics – well, the current President has been known to make pronouncements based on whatever he happens to see while devotedly watching Fox News. It is not farfetched to imagine him souring on Mr. Trudeau’s government based on what aired on Monday evening, just as he might have wanted a diversion from the collapse of Republican health-care legislation, and a few weeks from the start of talks to renegotiate NAFTA.
There are no signs yet that Mr. Trump is taken with the Khadr saga. But even if U.S. media moves on soon, and the issue blows over there without consequence, something seems to have changed in the face Canada puts forward.
Late on Monday night, Conservative foreign affairs critic Tony Clement responded to the release of worrying but vaguely worded U.S. objectives for the NAFTA negotiations by declaring, on Twitter, that “PM Trudeau’s much-vaunted U.S. strategy is already in tatters.”

Perhaps Mr. Clement was overexcited because of his party’s big day south of the border. But it wasn’t the sort of thing you’d have heard from the Conservatives on this subject until very recently. Despite CanadaU.S. relations being the most important matter facing Mr. Trudeau’s government, or perhaps because of that, the opposition seems to have gone back to opposing.

The Globe and Mail. 19 Jul 2017. Stop fretting, Canada – NAFTA is safe 
LAWRENCE MARTIN

Initially, Donald Trump was going to abrogate the North American free-trade agreement. Throw it into the trash can. His knee-jerk harangues about every trade deal being a disaster spread fear and trepidation north of the border.But Canadians can stop the fretting. The deal is safe. Mr. Trump’s termination plan has become a middling modernization scheme. The Washington wish list for NAFTA changes, published Monday, is hardly radical. Throw out the dispute-resolution system? Existing panels haven’t always worked well. Come up with a better method.
Dairy trade? There is no Washington ultimatum, as feared, to do away with our supply-management system. Elsewhere, there are some nettlesome American proposals but, as in any negotiation, there will be compromises on each side. Win a few, lose a few.
What happened on this file is that Ottawa scored at the bargaining table before the bargaining even began. Even some of Justin Trudeau’s harshest conservative critics accord him points for his management of the Trump file. To dim the fire of the U.S. President’s ire, he combined personal charm with evidencebased argumentation.
His philosophy runs directly counter to Mr. Trump’s populist nationalism. The Trudeau vision is tantamount to a declaration of interdependence. Multiculturalism, multilateralism, environmentalism, open immigration, open trade and goodwill to all, including Omar Khadr.
On all this, he need hope that Mr. Trump keeps his eyes wide shut so as not to have a change of mind. He need hope that he doesn’t fixate on such things as The Wall Street Journal article by Conservative MP Peter Kent. Entitled A Terrorist’s Big Payday, Courtesy of Trudeau, it was a one-sided attack – conveniently leaving out considerations such as the Charter, the rule of law and a half-dozen other salient points – that had Fox News frothing at the mouth at the Canadian Prime Minister.
Bear in mind, however, that the Trudeau bilateral strategy is multipronged, spreading beyond the White House to Congress and to the state-government level, where his interdependence pitch is striking a chord.
Last week, Mr. Trudeau scored a coup by becoming the first foreign head of government to be invited to address the U.S. National Governors Association. In Rhode Island, many governors lined up with him versus the White House on trade, the environment and global outreach. Washington State’s Governor, Jay Inslee, put it bluntly, saying the governors were compensating for the “giant sucking sound of ignorance” at the federal level. Pressure from the governors has been a factor and will continue to be a factor in preventing the Trump administration from going overboard in its NAFTA demands.
In helping him succeed in the United States and elsewhere on the foreign stage, observers also credit Mr. Trudeau’s personal charm and charisma. But it is more than that. It has much to do with the spirit of goodwill he brings to bear. I was a correspondent in Washington when Pierre Trudeau was prime minister, and while his intellect was admired, he was vexatious, and lacking in his son’s optimism and popularity. Brian Mulroney succeeded with the White House but, unlike Justin Trudeau, had the advantage of dealing with like-minded Republican presidents.
The Trudeau outreach and goodwill-guy approach – such a contrast to the extreme partisanship of Stephen Harper – appears to have been adopted by French President Emmanuel Macron. He may overtake the Canadian Prime Minister as the international media darling and Trump favourite. The French leader invited the U.S. President to Bastille Day and, despite their egregious policy differences, they got along swimmingly. Mr. Trump called France the United States’ first and oldest ally and said the two countries were together now, “perhaps more so than ever.”
What claptrap. The French people can’t stand Mr. Trump nor, for that matter, can the large majority of Canadians.
The game of smoke and mirrors will play out. Mr. Trump’s views are not entrenched. They can swing wildly. Things such as the Khadr story could change his mind on Mr. Trudeau and bilateral issues.
But the Trump brand is losing badly in public opinion in his own country and abroad. The new zeitgeist is with the Macrons and the Trudeaus.

The Globe and Mail. Jul. 19, 2017. GLOBE EDITORIAL. After so much bluster, Trump’s mild NAFTA demands are a relief

Is that it? Is that all the Americans are asking for, as their opening negotiating position on the future of the North American free-trade agreement? Canada, you may now exhale.

After all the noise candidate Donald Trump made about trade deals as alleged destroyers of American jobs, with Mexico the chief villain and NAFTA a weapon aimed at American workers, it was expected that the administration of President Trump would go into the NAFTA talks with some very steep demands. Unlike a traditional Republican, he essentially ran against free trade, portraying it as a zero sum game, where you are either a winner or a loser. He promised that he, master deal-maker, would rewrite the rules and turn the rest of the world into losers.

Six months into his presidency, however, and Mr. Trump is making a habit of letting down voters foolish enough to have bought into his campaign rhetoric.


This week, he did it on health care: Having campaigned on repealing Obamacare and replacing it with something cheaper, better and offering more benefits with zero obligations – an impossible promise, in other words – he and his party have now thrown up their hands and accepted the status quo.

He’s about to do it on NAFTA. On Monday, U.S. Trade Representative Robert Lighthizer released the administration’s aims for the renegotiation of the free trade pact. There’s a lot here that Canada can and will object to – but the list of demands doesn’t match the fire-breathing rhetoric of a few months ago.

That may be a disappointment to Trump voters. It should be the opposite for Canadians.

To be clear, the reopening of NAFTA is not a good thing. Surgery is never something to be entered into lightly. But until recently, it looked like the goal of the American physician was engineering the patient’s demise. That’s why Mr. Lighthizer’s shopping list comes as a relief: His goal is merely injuring NAFTA, not giving it a toe tag and sending it to the morgue. This is progress.

What does the American chief negotiator say he wants? Some of it Canada can benefit from, such as an opening up of this country’s agricultural supply-management system. Some of it is problematic, like a call to effectively make a lot of consumer e-commerce duty- and tax-free; that would appear to give non-Canadian e-retailers an huge advantage over traditional, local retailers who have to collect GST, HST and provincial taxes.

And some of what the Americans want is a non-starter. At the top of the list is a call to get rid of the bi-national dispute settlement mechanism. This issue nearly scuppered the free trade deal a generation ago, and it’s not hard to see why Canada demanded that it be part of any agreement.

Think of a trade agreement like a contract between countries. When people sign a contract, an outside and impartial body – a court – may at some point have to decide who is living up to the terms, and who is not. NAFTA’s dispute settlement system is far from perfect, but ditching it would mean that in future trade disputes, the U.S. government would get to play complainant, prosecutor and judge, all rolled in one.

Washington, the larger party, likes that idea. Canada, the smaller party, wants and needs a contract enforced by the rule of law.

Mr. Lighthizer says his team will also push for a carve out for “Buy American” programs, which basically means exempting them from the rules of free trade.

The Americans also want to no longer exempt Mexican and Canadian firms when they take what are known as “safeguard” actions to restrict the import of some classes of foreign goods. That’s also a carve out from the principle of free trade, and a diminution of NAFTA, since it would mean subjecting Canadian and Mexican firms to the same treatment as those from outside the free-trade zone.

And Washington wants Canada and Mexico to be completely opened to foreign investment in all sectors. Canada has traditionally restricted investment in sectors from telecommunications to banking to culture.

The dispute settlement demand is a non-starter. The rest, Canada can at least work with, and aim to modify, diminish and trade away for other things. In fact, as part of the horse-trading process, the Canadian government needs to come up with a long list of demands of its own.

Of course, there are no guarantees that all will end well. Canada is not a target many American voters are interested in bashing, but Mexico is another story. And there are elections in both Mexico and the U.S. next year, and voters in both countries who want to see politicians taking shots at those on the other side of the border. Things can always go off the rails. But the NAFTA weather forecast, formerly a tornado warning, has for the moment been revised down to mild rain showers, with a chance of sun.

The Globe and Mail. Bloomberg News. Jul. 19, 2017. Date for NAFTA talks said to be released as soon as Wednesday
JOSH WINGROVE AND ANDREW MAYEDA

Details of the first round of talks on the North American Free Trade Agreement are expected to be announced later Wednesday, according to an official familiar with the plans.

Representatives of the U.S., Canada and Mexico met in Washington Tuesday to discuss the next steps, with Canadian and Mexican trade officials slated to meet again Wednesday in Ottawa.

The first round of formal talks, which can’t begin before August, will be held in Washington at a date set to be revealed as soon as Wednesday, said the official, speaking on condition of anonymity because the discussions are private.

U.S. President Donald Trump’s administration announced its list of negotiating objectives for Nafta talks Monday, days after Vice President Mike Pence said they’re looking for a “win-win-win” solution. Canada has said it’s confident the deal can be updated and improved, and Mexico has called for talks to finish by the end of this year, ahead of a presidential election in mid-2018.

BLOOMBERG. 19 July 2017. Editorial Board. Nafta Gets a Reprieve. And that's a good thing. Let's change Nafta this much.
By The Editors

President Donald Trump has made a welcome retreat from his threats to scrap "the worst trade deal maybe ever signed anywhere." His administration's plan for renegotiating the North American Free Trade Agreement, released this week, is surprisingly benign.

Granted, the administration's declared purpose for those talks -- to reduce the U.S. trade deficit -- highlights its weak grasp of basic economics. The U.S. current-account deficit follows as a matter of arithmetic from the imbalance between the country's saving and investment. Unless the U.S. starts saving more or investing less, that deficit won't decline -- regardless of this or any other trade agreement.

The right way to judge trade deals is to ask instead whether they promote competition and efficiency for all participants. Nafta has met that test, so there's something to lose by meddling with it. Yet the agreement isn't beyond improvement. Despite the misconception that underlies the administration's whole approach, some good might even come of the approaching talks.

For instance, the administration wants to strengthen the pact's labor and environmental standards, and to improve protection of U.S. intellectual property. Maybe those ideas sound familiar: They were main elements of the ambitious Trans-Pacific Partnership negotiated by the previous administration and then abandoned by Congress. Changes along those lines, cautiously implemented, could serve to modernize Nafta and better equip it for modern trading conditions and new kinds of trade.

The administration also wants to introduce formal safeguards against currency manipulation, so countries can take action against partners that are holding down the value of their currency to boost exports. The issue is irrelevant in North America (nobody is accusing anybody else of being a currency manipulator) but U.S. officials apparently want to set a precedent for future deals. That's all right. Currency manipulation can indeed be a problem -- as it once was with China -- and measures to regulate it would be helpful.

Some of the administration's other ideas are more threatening. The administration wants to weaken the dispute-settlement procedure that gives Canada and Mexico a way to block proposed U.S. trade sanctions. Any such reform would also weaken U.S. rights in challenging Canadian or Mexican sanctions. Effective dispute settlement helps to stop trade disagreements from escalating.

The U.S. also wants to retain, and maybe strengthen, rules that allow different levels of government to prefer local over foreign producers. That's a pity. The benefits of trade accrue to the public and private sector alike. Do you want it done cheaper and better? Let trade do its job.

Overall, it's telling that Canadian and Mexican officials seem unfazed by the proposals, and that Democrats in Congress are attacking them for failing to say more precisely how they'll actually suppress trade. Consider that a valuable endorsement. Trump's theory of trade is wrong, but his Nafta strategy isn't.

MANUFACTURING

StatCan. 2017-07-19. Monthly Survey of Manufacturing, May 2017

Manufacturing sales
$54.6 billion
May 2017
1.1% increase
(monthly change)

Inventories
$73.7 billion
May 2017
-0.2% decrease
(monthly change)

Inventory-to-sales ratio
1.35
May 2017
-0.02 pts decrease
(monthly change)

Unfilled orders
$89.1 billion
May 2017
-1.5% decrease
(monthly change)

Source(s): CANSIM table 304-0014.

Manufacturing sales increased for the third consecutive month, up 1.1% to $54.6 billion in May. The gain was mainly attributable to higher sales in the transportation equipment and chemical manufacturing industries.

Sales were up in 16 of 21 industries, representing 71% of the manufacturing sector. Sales of durable goods rose 2.2%, while sales of non-durable goods declined 0.3%.

Chart 1   Chart 1: Manufacturing sales rise
Manufacturing sales rise



In constant dollars, sales were up 1.1%, indicating that higher volumes of manufactured goods were sold in May.

Transportation equipment and chemical sales lead the gains

Sales in the transportation equipment industry rose 4.2% to $11.5 billion in May, the third gain in four months. The growth was the result of increases in the motor vehicle (+8.6%) and the motor vehicle parts (+5.7%) industries, mainly reflecting higher volumes. After removing the effect of price changes, sales in volume terms rose 8.1% and 5.0% respectively in these industries in May.

Chemical manufacturing sales increased 2.4% to $4.4 billion, following three months of declines. The gain was widespread among all seven chemical manufacturing industries. However, the pesticide, fertilizer and the other agricultural chemical manufacturing industries posted the largest sales increase. Generally, sales spike in these industries once seeding in the agricultural sector has taken place.

In constant dollars, sales in the chemical industry were up 1.5%, indicating higher volumes of chemical products were sold.

These increases were partially offset by a 3.4% decline in the petroleum and coal product industry to $5.0 billion, mostly reflecting lower prices. After removing the effect of price changes, sales volumes of petroleum and coal products rose 0.7% in May.

Sales up in six provinces, led by Ontario

Sales increased in six provinces in May, led by Ontario.

Sales in Ontario increased 2.6% to $26.3 billion in May, their highest value on record. Growth in May was largely attributable to the motor vehicle (+8.7%) and motor vehicle parts (+5.8%) industries. These increases were partially offset by lower petroleum and coal product sales (-6.6%).

In Alberta, sales rose 1.3% to $6.1 billion, the seventh consecutive monthly increase. Sales were up in 11 of 21 industries, largely driven by gains in the chemical (+8.9%) industry and, to a lesser extent, the machinery industry.

Sales in Quebec fell 1.8% to $12.7 billion in May, following a 2.3% increase in April. The decline was mostly attributable to lower production in the aerospace product and parts industry and lower sales in the food industry. These decreases were partly offset by higher sales in the paper, wood product, and plastics and rubber products industries.

Inventory levels edge down

Manufacturing inventory levels edged down 0.2% to $73.7 billion in May, following five months of gains.

Chart 2   Chart 2: Inventory levels edge down
Inventory levels edge down



Inventories fell in 8 of the 21 industries, with the aerospace products and parts (-2.6%) and the chemical (-2.0%) industries recording the largest declines. These decreases were partially offset by a 1.8% increase in primary metal inventories.

The inventory-to-sales ratio declined from 1.37 in April to 1.35 in May. This ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Chart 3   Chart 3: The inventory-to-sales ratio declines
The inventory-to-sales ratio declines



Unfilled orders decline

Unfilled orders fell 1.5% to $89.1 billion in May, following three months of gains. Most of the decrease was attributable to a drop in unfilled orders in the aerospace products and parts industry.

These declines were partially offset by an increase in unfilled orders in the fabricated metal product and machinery industries.

Chart 4   Chart 4: Unfilled orders decline
Unfilled orders decline



New orders declined 3.6% to $53.3 billion in May, following five months of gains. The decrease mostly reflected lower new orders in the aerospace product and parts industry. These declines were partially offset by higher new orders in the motor vehicle and motor vehicle parts industries.

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/170719/dq170719a-eng.pdf

REUTERS. JULY 19, 2017. Autos lift Canadian manufacturing sales more than expected in May

OTTAWA (Reuters) - Canadian manufacturing sales posted the largest gain in five months in May, rising to a record level on higher sales of motor vehicles and parts, data from Statistics Canada showed on Wednesday.

The 1.1 percent increase to C$54.6 billion ($43.2 billion) from April topped economists' forecasts for a gain of 0.8 percent and was the biggest increase since last December.

However, April's sales were downwardly revised to show a gain of 0.4 percent from the originally reported 1.1 percent increase.

Overall, sales rose in 16 of the 21 sectors surveyed in May, accounting for 71 percent of overall manufacturing. Stripping out the effects of price changes, volumes were strong, up 1.1 percent.

Sales in the transportation equipment sector rose 4.2 percent, driving May's gains as the vehicle and parts sectors saw sales volumes jump.

Among other sectors, chemical manufacturing sales increased 2.4 percent, led by pesticide, fertilizer and other agricultural industries. Such sales typically spike once farmers have seeded their crops in the spring, the statistics agency said.

New orders pulled back by 3.6 percent after five consecutive months of gains. Orders were weighed by decreased demand for aerospace products and parts, though that was offset by higher orders for vehicles.

Reporting by Leah Schnurr; Editing by Chizu Nomiyama

MINING - COAL / CANADA-INDIA

REUTERS. JULY 19, 2017. India steel ministry says increased Canadian coking coal import likely

NEW DELHI (Reuters) - India plans to increase its import of coking coal from Canada in a bid to diversify its import basket, the steel ministry said in a statement on Wednesday.

India was in talks with Canada's Teck Resources Ltd (TECKb.TO) for long-term purchase agreements after a cyclonic disruption in Australia cut supplies earlier this year, Reuters reported earlier this month.

"Although various measures are being taken to increase the supply of indigenous coking coal, India's dependence on imported coking coal would continue," the statement said.

"In such a scenario, multiple options for sourcing coking coal imports would lead to cost advantage and choice," the ministry said, adding that Canadian coking coal imports were expected to increase.

The Indian delegation led by Steel Minister Chaudhary Birender Singh met with Teck executives in Canada earlier this month, the statement said, along with executives from ArcelorMittal SA (MT.AS), among others.

Reporting by Neha Dasgupta; Editing by Amrutha Gayathri

EDUCATION - CAREER

The Globe and Mail. 19 Jul 2017. Made in Canada: How to attract and retain top talent. Dean of the G. Raymond Chang School of Continuing Education at Ryerson University and a former Ontario cabinet minister
MARIE BOUNTROGIANNI

We are living in an employer’s market. New university and college graduates are in strong competition with one another as they enter the job market. Enrolment numbers at Canada’s postsecondary institutions are rising; in 2015, there were more than two million students enrolled, compared with 800,000 in 1980. While this increase could be seen as an advantage to many employers, it also presents a considerable, often daunting challenge to organizational recruitment.
Meanwhile, the needs of the labour market are changing. The Canadian Chamber of Commerce recently held a roundtable discussion entitled Skills for an Automated Future, in which I participated as a panelist. The event was attended by senior-level representatives from both the private and public sector, as well as educators. The results of the discussion were resounding: Canadian businesses and postsecondary institutions need to work more closely than ever to train the highly skilled employees of tomorrow and retain top-tier talent.
Consider the following strategies to attract and recruit top-tier talent at your organization. Increase opportunities for students
Expand co-op and internship opportunities. An employer survey conducted by Leger Marketing for Universities Canada indicates that 80 per cent of employers identified co-op and internship students as an ideal source for new talent. Moreover, students are keen to learn and eager to acquire on-the-job experience. The government of Ontario demonstrated a strong commitment to experiential learning when they allocated $190-million over three years to securing workplace opportunities for students through the Career Kick-Start Strategy. Work with universities and colleges to find qualified, dedicated talent. Start a mentorship or coaching program
Opportunities for mentorship and coaching within the workplace are a big draw for savvy professionals. These kinds of supports will not only help employees develop a different way of thinking; they will inevitably support business growth. I have heard from employers who fear they will lose employees to higher-paying opportunities after investing resources on them; I encourage these individuals to reconsider this perspective. I know a young professional who is a champion for a bank he left upon being recruited for a data-analyst position at a ministry with a higher salary and more direct reports. Even if this talent does leave, they will be an ambassador for your organization. Commit to digital literacy
It is no secret that technology is the fastest-growing sector in Canada. In the near future, every working professional will be required to have a certain level of digital literacy or competency using digital devices. The Organisation for Economic Co-operation and Development (OECD) anticipates significant change in the labour market with impending technological innovation; 9 per cent of jobs may be at risk of elimination and 32 per cent may find their job duties changing. Offer workshops or seminars within your organization to help employees develop these skills and prepare themselves for the forthcoming knowledge economy. Allow employees to grow
Technology is also making it easier to access and customize education. Design an incentive program that funds or subsidizes learning opportunities for your employees. Continuing-education programs throughout Canada offer innovative programming that supports adult learners looking to upgrade a skill or learn a new one. Employees greatly appreciate when organizations are attuned to their professional growth. The Canadian Education & Research Institute for Counselling (CERIC) recently funded the publication of a playbook for career management entitled Retain and Gain, which emphasizes the importance of supporting employee growth. The playbook asserts that highly engaged employees are three times more likely to do something good for their organization. Show employees their value to your organization. Demonstrate engagement in community
Similar to how employers appreciate job candidates who show goodwill through volunteer experience, discerning professionals appreciate when an organization demonstrates a commitment to community. Sponsor events or programs organized by non-profits, if your organization can afford it. Alternatively, consider establishing a company-wide day of service where everyone contributes. The 2015 Millennial Report indicates that 70 per cent of millennials volunteered in the previous year and 69 per cent of millennial employees admitted that they would be inclined to make a donation if their organization offered to match part of it. In these times of sociopolitical unrest, there is a general increased appreciation for organizations and leaders who do good. Set a good example for prospective talent.
The strength and prosperity of our country depends on the talented professionals employed in our organizations. Canadian universities and colleges are committed to attracting the best students from both within Canada and from abroad. Let us work together to retain this talent. Executives, educators and humanresources experts contribute to the ongoing Leadership Lab series. For more articles, go to tgam.ca/ careers.

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LGCJ.: