CANADA ECONOMICS

72ª UN GENERAL ASSEMBLY

The Globe and Mail. 20 Sep 2017. Trump uses United Nations stage to threaten North Korea. Trump: Israeli PM lauds U.S. President, while Iran and Venezuela hit back.
ADRIAN MORROW
With a report from Michelle Zilio in New York

In debut address, U.S. President delivers ‘America first’ speech also taking aim at Iran and Venezuela
Donald Trump threatened to “totally destroy” North Korea if Kim Jong-un refuses to back down from his nuclear missile program, in a debut speech to the United Nations that painted a dark picture of a world under siege and ratcheted up international tensions.
The U.S. President took a hard line in his first address to the UN General Assembly Tuesday, warning he might tear up the Iran nuclear deal, blaming migrants for hurting the American working class, slamming socialism for destroying Venezuela and vowing to “crush loser terrorists.”
The packed room was largely silent during a speech that was a far cry from the usual cautious language of the United Nations, offering occasional muted applause, while some diplomats folded their arms and wore grim expressions.
Mr. Trump used his 40-minute turn before the world’s leaders to lay out an international version of his “America first” ideology, insisting all countries embrace a “reawakening” of patriotism but come together to meet international threats. The speech comes as the President faces tumult at home, with few domestic policy achievements and a series of investigations into his campaign’s connections to Russian interference in last year’s elections.
The address was silent on a number of major international problems, including climate change and the attacks on Rohingya people by the military of Myanmar. »
There were echoes between Mr. Trump’s rhetoric Tuesday and his combative inaugural address, which described the “American carnage” of shuttered factories that the President vowed to reverse by embracing a tough new nationalism.
“Major portions of the world are in conflict and some in fact are going to hell,” he said at the UN, drawing whispers among the assembled leaders.
No international issue has confounded the Trump administration like North Korea’s nuclear and missile program. In the past month, Mr. Kim has fired two missiles over Japan and conducted his country’s most powerful test of a nuclear weapon. Mr. Trump has responded by mocking him on Twitter with an epithet derived from an Elton John song.
“Rocket Man is on a suicide mission for himself and for his regime,” Mr. Trump warned Tuesday, saying that the United States doesn’t want war in North Korea but that if “forced to defend itself or its allies, we will have no choice but to totally destroy North Korea.”
Mr. Trump’s plan appears to be to make Mr. Kim back down under threat of retaliation, but it is certain to heighten fears the world is moving closer to a nuclear confrontation. Such a war would be a humanitarian catastrophe that could put at risk tens of millions of people on the Korean Peninsula and in Japan. North Korea’s ambassador to the UN, Ja Songnam, walked out before the speech.
Carla Anne Robbins, national-security expert at the Council on Foreign Relations in Washington, said that beyond goading Mr. Kim, the President’s comments didn’t seem to lay out a strategy for solving the problem.
“I did not see much of a way forward here, other than reiterating what the ultimate goal is and threatening [North Korea] with total obliteration,” she said at a roundtable with reporters after Mr. Trump’s address. “The impact of all of this was to crank Pyongyang up and not offer a huge amount of reassurance to the allies.”
Prime Minister Justin Trudeau, speaking in Ottawa before heading to the UN, called for diplomacy.
“I share everyone’s concern about the reckless behaviour by the North Korean regime and continue to believe that working with partners and allies in the region and around the world, including China, Japan, South Korea and the United States, is the best way to de-escalate this situation,” he said.
Later on Tuesday, at an awards gala in New York, Mr. Trudeau called on world leaders to renew their commitment to global alliances such as NATO and multilateral bodies such as the United Nations.
Mr. Trudeau will address the UN General Assembly later this week. His push for global co-operation comes on the heels of the speech by Mr. Trump, who encouraged other world leaders to put their countries first.
Israeli Prime Minister Benjamin Netanyahu, however, unequivocally praised Mr. Trump. “In over 30 years in my experience with the UN, I never heard a bolder or more courageous speech,” he tweeted.
Mr. Trump bashed the 2015 agreement that saw Iran halt its development of nuclear weapons in exchange for the United States and other countries lifting economic sanctions.
“The Iran deal was one of the worst and most one-sided transactions the United States has ever entered into. Frankly, that deal is an embarrassment to the United States and I don’t think you’ve heard the last of it – believe me,” he said.
He also trained his fire on Venezuela, where President Nicolas Maduro has seized dictatorial powers amid an economic crisis. Mr. Trump blamed Mr. Maduro’s socialism for the country’s problems, arguing that the ideology “has delivered anguish and devastation and failure” in any country that has adopted it.
Both Iran and Venezuela hit back. On Twitter, Iranian Foreign Minister Mohammad Javad Zarif described Mr. Trump’s address as an “ignorant hate speech” that “belongs in medieval times.” Mr. Maduro told a rally in Caracas that the U.S. President was “the new Hitler of international politics.”
Stewart Patrick, a foreign-policy adviser in the George W. Bush administration, said Mr. Trump’s overarching goal seemed to be reconciling his nationalistic campaign rhetoric with the imperative to cooperate on North Korea and other problems. In the speech, the President lauded the patriotism of other countries – including Poland, France and Britain – drawing a parallel with his own “America first” agenda.
“He managed to square a circle, if you will,” Mr. Patrick, author of The Sovereignty Wars, said at the Council on Foreign Relations roundtable. “He said, ‘Look, we’re here to pursue our national interests but, of course, all of you countries and all of you leaders who are here are here to pursue your national interests.’ ”

The Globe and Mail. 20 Sep 2017. Trump’s speech a throwback to a darker world. The President’s verbal fireworks before the General Assembly were a display of language whose fearsome outcomes led to the creation of the United Nations in the first place
DOUG SAUNDERS

As much as our eyes may have been drawn to the bright flash of his war threats, what made U.S. President Donald Trump’s speech to the United Nations General Assembly truly remarkable and disturbing was not the verbal fireworks directed at North Korea, the sabre-rattling directed at Iran or the Cold War threats aimed at Venezuela’s alarming regime.
Nor was it the disarmingly polite and deferential opening flourish, in which Mr. Trump poured lukewarm praise upon the 72-year-old world body for its collective protection of national sovereignty, minutes before threatening to abrogate that sovereignty unilaterally if certain rogue states transgressed his limits.
While most of the 193 UN member states would not go as far as to threaten to “totally destroy” North Korea if its “rocket man” dictator Kim Jong-un were to menace the United States with his nuclear arsenal, almost every government agrees with the broad sentiment behind it. Everyone wants to get rid of Rocket Man, as long as Seoul isn’t destroyed in the process.
For sure, even many of his allies probably found Mr. Trump’s language embarrassing and counterproductive – it was an almost comically precise parroting of the bellicose phrases Mr. Kim directs at the United States on a near weekly basis in televised rants. As a result, the President’s bellicose message sounded, to many listeners, like a display not of strength but of impotence.
But that was not the remarkable feature of Mr. Trump’s speech. Many world leaders in attendance had been present exactly 15 years earlier, when George W. Bush made his 2002 address to the General Assembly asking its members to back the U.S. invasion of Iraq.
That time, like this one, the speech felt like a bait-and-switch: Mr. Bush had won UN support for the war in Afghanistan, which had housed a dangerous organization that attacked the United States, but then had devoted his energies to the completely unrelated, non-imminent and complex threat of Saddam Hussein. That speech failed to win wide international support, and was probably a major reason why the Iraq war turned into a debacle.
This time, Mr. Trump had the world’s sympathies on North Korea’s threat, and has already won wide support via a unanimous UN Security Council vote on robust sanctions. But he burned away much of that goodwill on Tuesday by trying to shift attention to the utterly unrelated, nonpressing and far more complex issue of Iran.
The largest share of Mr. Trump’s speech was devoted to threatening Tehran – a highly unpopular position, given that key UN members devoted much of the past decade to negotiating a difficult and hardfought nuclear peace deal with Iran. That deal has been very successful, as observers’ reports continue to show, and nobody in the region, except perhaps Saudi Arabia and Israel, wants to push Iran back into the darkness.
But purposeless threats against Iran are hardly surprising developments from a U.S. Republican president; diplomats are crossing their fingers in hope that this is yet another of Mr. Trump’s bluffs.
Most alarming, to veteran leaders and diplomats from other democracies, was the larger message Mr. Trump carefully delivered about the sort of world he would like to see. It was a message that did not contain the words “democracy” or “human rights,” to say nothing of the word “climate.”
And it was a message that had its climax in this rather shocking passage, which seemed to have been cribbed from the darkest moments of the 1930s: “Now we are calling for a great reawakening of nations. For the revival of their spirits, their pride, their people and their patriotism. History is asking us whether we are up to the task. Our answer will be a renewal of will, a rediscovery of resolve, and a rebirth of devotion. We need to defeat the enemies of humanity and unlock the potential of life itself … the ancient wish of every people, and the deepest yearning that lives inside every sacred soul.”
That steely talk of vengeful national will and angry patriotism, devoid of any scent of democracy or international co-operation, salted with praise for Saudi autocrats, coupled with a genuine threat to withdraw from the climate and nuclear-peace treaties that have kept the world safe from its worst futures, was all too familiar to many of the leaders seated in New York on Tuesday. They know this sort of language from their own 20th-century history – it was precisely the sort of language whose fearsome outcomes led to the creation of the United Nations.

BLOOMBERG. 20 September 2017. Trump Aides Defend ‘Rocket Man’ Tag in UN Speech on North Korea
By Margaret Talev and Nick Wadhams

• ‘Rocket Man’ Kim is inviting his country’s demise, Trump says
• U.S. president emphasizes nationalism in confronting threats
• Trump Says North Korea's Un Is on a 'Suicide Mission'
• Trump: Time for World to Isolate N. Korean Regime

President Donald Trump’s warning to North Korea of annihilation if it menaces the U.S. or its allies -- and his reference to its leader as “Rocket Man” in his United Nations speech -- were defended by aides as making an honest yet provocative argument to world leaders about collective threats.

“What you saw yesterday from the president was he was being honest,” U.S. Ambassador to the UN Nikki Haley said on ABC on Wednesday. “I know the people and countries don’t want to hear it, but here’s a man who continues to test ballistic missiles, he continues to test, now, hydrogen bombs.”

In his first speech to the UN General Assembly, Trump at times cast aside conventions of political and diplomatic dialogue in favor of the aggressive dialect of social media. He vowed to crush “the loser terrorists” in the Mideast and pinned the belittling nickname on North Korean regime leader Kim Jong Un.

“The United States has great strength and patience, but if it is forced to defend itself or its allies, we will have no choice but to totally destroy North Korea,” Trump said Tuesday. “Rocket Man is on a suicide mission for himself and for his regime.”

Haley dismissed criticisms of the president’s use of the nickname, saying that “it worked.”

“I was talking to a president of an African country yesterday and he actually cited ‘Rocket Man’ back to me,” she said. “This is a way of getting people to talk about him.”

White House press secretary Sarah Sanders said of the “Rocket Man” label on Fox News, “That’s a President Trump original. As you know, he’s a master in branding.”

The U.S. strategy against North Korea is “still a diplomatically led effort,” Defense Secretary Jim Mattis said Wednesday at a defense conference outside Washington. But he said the “somber reality” is that “military options must be available.”

The other main targets of Trump’s rhetorical fire were Iran and Venezuela. 

He said the trappings of democracy in the Islamic Republic mask a “corrupt dictatorship” that supports terrorism. The international deal designed to curb Iran’s nuclear program is “an embarrassment to the United States” that should be revisited, he said. While he applauded other leaders for pressuring the regime in Venezuela, Trump said the U.S. is “prepared to take further action” to halt the imposition of authoritarian rule there.

National Sovereignty

Trump’s 42-minute speech amounted to a challenge to the UN, founded almost 72 years ago to “save succeeding generations from the scourge of war” and “reaffirm faith in fundamental human rights.” The address offered a window on how the themes and ideas of his “America first” political campaign will shape U.S. engagement in the world. In Trump’s view, the sovereignty of individual nations is paramount, and the nation-state -- not cooperative organizations like the UN -- is “the best vehicle for elevating the human condition.”

“As president of the United States, I will always put America first,” Trump said, “just like you, as the leaders of your countries, will always and should always put your countries first.”

The approach may appeal to Trump’s political base in the U.S. But the response at UN headquarters in New York mixed some surprise and disappointment. The most enthusiastic reaction came from Israeli Prime Minister Benjamin Netanyahu, who has closely aligned himself with Trump.

“In over 30 years in my experience with the UN, I never heard a bolder or more courageous speech,” Netanyahu, who has harshly criticized the Iran accord, said on Twitter afterward.
Speaking at a reception on Tuesday after Trump’s speech, European Union foreign policy chief Federica Mogherini said, “We don’t talk never never of destroying countries but about trying to bring peace in the world.”

Iran Accord



French President Emmanuel Macron who has forged a close relationship with Trump, contradicted the American president without mentioning him in his own address to the General Assembly. In remarks that aides said he tweaked at the last moment after hearing Trump, Macron said it’s “false” to think nations are stronger acting alone. He called the Iran nuclear accord “robust” and said “to put it into question without proposing anything to replace it is a grave error.”

North Korea has been the most urgent issue before the UN since the Kim regime’s Sept. 3 test of what it claimed was a hydrogen bomb and the launching of two missiles over Japan in the past month. Trump thanked both Russia and China for their support for the latest round of sanctions on North Korea but indirectly criticized China for continuing to trade with the isolated nation. He also cited “threats to sovereignty, from the Ukraine to the South China Sea,” unambiguous references to actions by Russia and China.

Trump followed that by condemning Iran as “an economically depleted rogue state whose chief exports are violence, bloodshed and chaos.” The president repeated his complaints about the Iran nuclear accord, calling it “one of the worst and most one-sided transactions the United States has ever entered into.”

“Frankly, that deal is an embarrassment to the United States, and I don’t think you’ve heard the last of it, believe me,” he said. Trump faces an Oct. 15 deadline to inform Congress whether the U.S. will continue to certify Iran’s compliance with the international accord -- a requirement from the president every 90 days.

Delegations

North Korea’s delegation, which was seated directly in front of the podium, left the hall before Trump began speaking. Iran’s Foreign Minister Javad Zarif dismissed Trump’s remarks as “foolish,” telling the state-run Iranian Students News Agency they were “so slogan-like they don’t deserve a reply.”

Carla Anne Robbins, adjunct senior fellow at the Council on Foreign Relations, said it wasn’t clear that Trump was laying out a new doctrine to guide U.S. foreign policy.

“Really the impact of all of this was to crank Pyongyang up and not offer a huge amount of assurance to the allies and certainly no way forward,” Robbins said on a conference call.

While stressing the primacy of national sovereignty -- he mentioned it 21 times -- Trump said that he hopes disputes would be resolved through the UN.

“Major portions of the world are in conflict, and some, in fact, are going to hell,” Trump said. “But the powerful people in this room, under the guidance and auspices of the United Nations, can solve many of these vicious and complex problems.”

But he was also critical of the institution, saying that it had too often concerned itself with “bureaucracy and process” and complaining that the U.S. bears an unfair portion of its cost.

Trump regarded the speech as a moment of enormous opportunity to rally the world to rein in North Korea and Iran, according to his aides.

After delivering it, he told reporters: “I think it went really well. I said what I had to say,” according to Fox News.

One key U.S. ally who missed the speech was U.K. Prime Minister Theresa May. May, who began the year by reaching out to Trump -- she was the first foreign leader to visit the White House after his inauguration -- was away from the UN hall at a round-table meeting for businesses that are investing in the U.K.

Several world leaders skipped the UN gathering entirely. German Chancellor Angela Merkel stayed at home as she fights for reelection in Sunday’s national elections. President Xi Jinping is in China preparing for next month’s crucial Communist Party congress. Mexican President Enrique Pena Nieto, who has been at odds with Trump over trade and border security, was absent as well.

— With assistance by Jennifer Jacobs, Gregory Viscusi, Ladane Nasseri, Robert Hutton, John Follain, and Anthony Capaccio

The Globe and Mail. 20 Sep 2017. Trudeau urges world leaders to work together with ‘renewed commitment’
MICHELLE ZILIO

Prime Minister Justin Trudeau is warning that long-standing international order is being tested, calling on world leaders to renew their commitment to global alliances such as NATO and multilateral bodies like the United Nations.
Mr. Trudeau made the remarks at an awards gala in New York Tuesday night, ahead of his speech to the UN General Assembly later this week. His push for global co-operation comes on the heels of a largely nationalist speech by U.S. President Donald Trump, who encouraged other leaders to put their countries first in his speech to the world body Tuesday.
“We live in a time where global peace and security, free and fair trade, human rights and liberty, have never been more intertwined – or, in this postwar era, at greater risk and in greater need of our active, focused engagement,” Mr. Trudeau said in an address to the Global Citizens Awards gala.
“Worldwide, the long-established international order is being tested.”
The Prime Minister said it is time for democracies to work together to “renew” their commitment to the “universal standards of rights and liberty” through alliances that “have underpinned global security and prosperity since 1945.”
“We have to work together on this. Which means a renewed commitment to long-standing alliances such as NATO and NORAD [North American Aerospace Defence Command], and bodies such as the United Nations and the WTO [World Trade Organization].”
His comments came hours after Mr. Trump said other countries can learn from his nationalism while also co-operating with allies to tackle global threats.
“I will always put America first. Just as you … should always put your countries first,” Mr. Trump said in his first-ever speech to the General Assembly.
Mr. Trump also threatened to “totally destroy North Korea,” intensifying tensions in the ongoing nuclear weapons standoff between the United States and the so-called Hermit Kingdom.
Prior to his speech Tuesday night, Mr. Trudeau met with South Korean President Moon Jae-in, who was also honoured at the gala. The leaders discussed the threat posed by North Korea’s nuclear tests and agreed on the need for the international community to implement all UN Security Council resolutions against Pyongyang, according to a statement from the Prime Minister’s Office.
In his address, Mr. Trudeau said global security requires the ability to practice “hard power” when needed, highlighting his government’s commitment earlier this year to boost military spending by more than $62-billion over the next two decades.
He pointed to “free and fair trade” as another major pillar of global security, emphasizing the need to modernize long-existing trade agreements such as the North American free-trade agreement. As a part of a NAFTA renegotiation process prompted by the Trump administration, Ottawa is playing host to the third round of talks between Canada, the United States and Mexico this weekend.
Mr. Trudeau defended his Liberal government’s approach to the NAFTA talks, which have focused on gender equity, Indigenous rights, environmental protection and labour standards.
“Some appear to have been confused by this. It’s as though they expect us to do trade exactly the same way it was done by our parents a quarter century ago,” Mr. Trudeau said.
“Progressive trade is not a frill.”
He added that the Canada-European Union free-trade agreement, known as CETA, has set a precedent as the most progressive trade agreement in the world. The agreement comes into force this week.
Mr. Trudeau concluded his speech by calling for the advancement of human rights and liberty. Reflecting on Canada’s role leading opposition to South Africa’s apartheid system in the 1980s, he said the world needs to channel that strength again in the fight against intolerance.
“We need to be every bit as strong, every bit as vigilant, in opposing the scourges of racism, sexism, homophobia, transphobia, ethnic and religious bigotry, neo-fascism, neo-nazism and the violent extremism of [the Islamic State] that confront us in 2017.”
Mr. Trudeau is in New York this week with his wife, Sophie Grégoire Trudeau, and six cabinet ministers. On Wednesday, he will participate in the Bloomberg Global Business Forum, as well as in a discussion on international development with Melinda Gates. That will be followed by a speech about youth engagement to 6,000 people at Madison Square Garden. He will end his trip by addressing the UN General Assembly on Thursday.

BLOOMBERG. 20 September 2017. World Leaders Push More Inclusive Approach to Globalization
By Andrew Mayeda

• Trade has driven global growth for centuries, Trudeau says
• Future of world work to be in services jobs, Alibaba’s Ma says

Global political and business leaders defended trade and globalization while acknowledging that countries must do more to address the concerns of people who feel left behind.

“Trade leads to growth. That’s the story of our world over the past centuries, and that’s a good thing,” Canadian Prime Minister Justin Trudeau said Wednesday at the Bloomberg Global Business Forum in New York. But “that growth hasn’t necessarily reached everyone,” and that’s led to either to political backlash “or falling back into the politics of fear, division, or envy or inward turning.”

Rather than mourning the loss of manufacturing jobs, the world should embrace the technological advances diffusing through the global economy, which will create growth in service jobs, said Alibaba Group Holding Chairman Jack Ma.

“We should not talk about made in China, made in America. It’s going to be made in the Internet,” he said.

Their comments came as world leaders gathered in New York for the annual United Nations General Assembly this week. While President Donald Trump was scarcely mentioned by name during the early part of the business forum, his administration’s nationalist approach to trade and immigration policy loomed large in the discussions. Trump has said he’ll put “America First” in his policy agenda, and during a speech Tuesday at the UN he threatened to “totally destroy” North Korea if forced to defend the U.S. or its allies.

‘Multilateralism’ Needed

French President Emmanuel Macron said the current system of international rules needs to be overhauled to address the world’s challenges. But he emphasized that cooperation must be at the core of any new system.

“We are in a very specific moment. We have a lot of global challenges: climate change, migrations, terrorism -- and for that, we do need multilateralism,” he said.

Countries need to take cooperation “to another level,” said former U.S. President Bill Clinton. “It depends upon our mind and our heart; first believing that we can and must every day expand the definition of us, shrink the definition of them.”

Trudeau said the next step for nations will be to champion “progressive” trade agendas, citing the need for provisions to strengthen labor and environmental standards and promote gender equality in trade accords.

— With assistance by Josh Wingrove, and Greg Quinn

CETA

THE GLOBE AND MAIL. AP. REUTERS. SEPTEMBER 20, 2017. EU, Canada launch free-trade agreement while Britain eyes own deal
YVES LOGGHE
PHILIP BLENKINSOP

BRUSSELS - The European Union and Canada will begin cutting import duties from Thursday on thousands of products and services in a reminder to Britain of the work it will take to replace the trade alliances it will give up when it leaves the EU.

The Comprehensive Economic and Trade Agreement (CETA) will provisionally enter force on Thursday, eight years after negotiations begun. It will be the EU's first major trade deal since it began implementing its South Korea agreement in 2011.

The Canada agreement is the EU's first trade pact with a G7 country, marking a success after its credibility took a beating from Britain's 2016 vote to leave the block.

It has since struck a deal with Japan and hopes for further agreements with Mexico and the Mercosur countries of South America by the end of this year.

British Conservatives in the European Parliament said on Wednesday that the EU-Canada deal would bring 1.3 billion pounds ($1.76-billion) in benefits to Britain and said they hoped CETA's benefits for Britain would continue after Brexit.

"I believe CETA will become the gold standard of agreements and one we can tailor to suit the priorities of the British and Canadian economies post-Brexit," lawmaker Emma McClarkin said in a statement.

British Prime Minister Theresa May said in Ottawa on Monday that she and Canada's Justin Trudeau had agreed that CETA should be "swiftly transitioned" into a new UK-Canada deal after Brexit.

How fast that transition occurs will depend on how much post-Brexit Britain wants to tailor the deal, perhaps by including closer convergence on financial services, rather than largely copying what is in place.

CETA will abolish some 98 per cent of customs duties, open up public tenders to companies and allow the EU to export more cheese and wine and Canada more pork and beef in quotas that expand over the next six years.

The 1,598-page CETA text is full of negotiated details, including the right of European companies to ship up to 537,000 knitted jerseys to Canada and Canadian companies' ability to send up to 196,000 square metres of carpet to Europe.

Britain and Canada will still have to create their own free trade agreement, which took the Brussels and Ottawa five years to negotiate.

TPP

REUTERS. SEPTEMBER 20, 2017. New Zealand election could put an obstacle in path to nailing TPP deal
Ana Nicolaci da Costa, Charlotte Greenfield

WELLINGTON (Reuters) - If New Zealanders vote this weekend to change who governs them, that could create an obstacle to plans by members of the Trans-Pacific Partnership (TPP) to finalize a trade deal in November.

After President Donald Trump withdrew the United States from TPP early this year, the group has 11 members. New Zealand and Japan have led the way in saying they remain committed to a deal to cut trade barriers in the Asia-Pacific region.

New Zealand’s opposition Labour Party, which is neck-and-neck with the ruling National Party in Saturday’s election, says it would renegotiate the TPP to accommodate its proposed ban on foreign ownership of existing properties.

Historically, both political parties have championed free trade.

Some analysts say that the plan by Labour, if it wins, might prompt other TPP members to make fresh demands, stalling the agreement or even leaving New Zealand out.

“It’s a real risk that other countries will seize the opportunity to find the parts that they don’t like about the deal and try to change them,” said Daniel Kalderimis, partner at Wellington law firm Chapman Tripp.

Todd McClay, New Zealand’s trade minister, told Reuters he expected “a positive decision” when ministers of the 11 remaining TPP nations meet during November’s Asia-Pacific Economic Cooperation summit in Vietnam.

‘NO RENEGOTIATION’

He said Labour’s plans were risky given the 11 have already said no to renegotiating the pact’s terms.

“What’s more likely to happen is the other countries say no, we’ve reached agreement, we said no renegotiation,” said McClay, who is due to co-chair the meeting if the National Party retains power in New Zealand.

Analysts say the ban Labour advocates would only have a minimal impact on the housing market, given that foreigners own a small percentage of homes in New Zealand, though the numbers are highly contested.

The nationalist New Zealand First Party, which could be a kingmaker after the vote, has also said it would renegotiate the TPP but would unlikely have enough leverage to make this a bottom-line in a coalition government, analysts say.

Jacinda Ardern, Labour leader, has said a government led by her party would still want to be part of TPP but that its “housing bottom line” was firm.

The fact that Labour has not said it would walk away from the TPP was significant, analysts said. Asked whether this meant Labour could give in on the ban if push came to shove, Labour trade spokesman David Parker said it would be “wrong to read that into it”.

John Ballingall, deputy chief executive of the independent New Zealand Institute of Economic Research, said he believes it is “very unlikely” that Labour would withdraw from TPP based on its concerns about foreign buyers of existing houses, as the trade pact would have many big benefits for the country.

If Labour does get power, “my suspicion would be that if push came to shove, they would support TPP,” Ballingall said.

Reporting by Ana Nicolaci da Costa and Charlotte Greenfield; Editing by Richard Borsuk

ECONOMY

THE GLOBE AND MAIL. SEPTEMBER 20, 2017. Canada's economy the G7 powerhouse, but housing a threat: OECD
MICHAEL BABAD

• OECD raises forecast for Canada
• But group worries about housing
• What to expect from the Fed today
• Markets at a glance

OECD upgrades forecast

The OECD is painting a much better picture of Canada's economy, but is worried about the threat of a housing bust.

In its interim outlook today, the Organization for Economic Co-operation and Development raised its projection for growth in Canada this year by 0.4 of a percentage point from its earlier forecast, to 3.2 per cent. Its call for 2.3-per-cent expansion next year remained unchanged.

This year's projection is the best among the G7.

The OECD's upgrade is certainly in line with indicators of late, notably the blistering 4.5-per-cent annualized pace of growth in the second quarter of the year.



The Bank of Canada, too, is more optimistic on the economy, having raised its benchmark interest rate twice.

"The revision to GDP is broadly in line with the rising consensus (we are now at 3.1-per-cent growth for this year), and isn't really controversial (especially when we already have data up to Q2)," Bank of Montreal chief economist Douglas Porter said of the OECD report.

"Slightly more notable is their 2.3-per-cent call for next year - that would imply a bit less cooling in the next few quarters than I suspect most are now forecasting. But, again, not really controversial, perhaps a tad above consensus."

CIBC World Markets chief economist Avery Shenfeld, in turn, said the OECD's forecast for this year "looks a shade high given data from the last two months showing cooling exports and manufacturing.

Like others, the OECD is still fretting about the threat from inflated housing markets, and that's where Canada comes in for special mention.

"In some advanced economies, including Australia, Canada, Sweden and the United Kingdom, house prices are elevated relative to rents, raising financial stability risks if rising interest rates were to trigger a housing market correction," it said.

Housing and household debt are huge issues in Canada, where Vancouver and Toronto, in particular, are the focus of the angst. Just this week, the Bank for International Settlements also warned that high consumer debt levels threaten the financial system.

One might take solace in the efforts of provincial and federal governments to tame those markets. But Vancouver is already rebounding from a policy-induced sales slump and the Toronto market is showing signs of bottoming, analysts say.

BMO's Mr. Porter noted that Canadians have heard these housing fears for years.

"What is interesting is how they've framed the concern - fretting about rising interest rates causing stress for borrowers," he said.

"Yet, it was the years and years of persistently low interest rates that led us into this issue on housing in the first place (and many would assert that the longer they are kept extraordinarily low, the greater the risk of an accident in housing)."

There are issues here for the Bank of Canada, as well, said CIBC's Mr. Shenfeld.

"On the issue of housing, rather than just rising interest rates, the threat to financial stability would come from a combination of higher interest rates and job losses by those with heavy debts," he said.

"That's one key reason why the Bank of Canada will be very careful to avoid raising rates too quickly, having promised to monitor how well households are coping as it does so."

Over all, the OECD didn't change much to its outlook for the global economy, holding its growth forecast steady at 3.5 per cent for this year, and nudging it up slightly to 3.7 per cent for next.

"The upturn has been more synchronized across countries," the group said, noting investment, employment and trade are picking up.

"However, strong and sustained medium-term global growth is not yet secured," it added.

"The recovery of business investment and trade remains weaker than needed to sustain healthy productivity growth. Wage growth has been disappointing, keeping inflation at low levels. Strong future growth in emerging market economies will depend on deeper reform."

The Globe and Mail. 20 Sep 2017. As Canada’s economy grows rapidly, and with more rate hikes in the cards, these five dividend stocks are worth a closer look. While a growth-oriented market bodes well for certain sectors, it puts pressure on ‘behemoths’ such as telecoms, consumer staples
JOHN HEINZL

For dividend investors, it’s a brave new world.
After several years of sluggish growth and falling interest rates, the investing environment has been turned on its head: Growth is picking up and interest rates are once again on the rise.
The reversal has been especially dramatic in Canada, where the economy has been growing so quickly – it expanded at a scorching annual pace of 4.5 per cent in the second quarter – that the Bank of Canada has raised its benchmark interest rate twice in the past few months, with more hikes possible.
For portfolio managers such as Darren Sissons, the new environment presents both challenges and opportunities.
“The market is transitioning towards a more growth-oriented theme,” says Mr. Sissons, a partner with Campbell Lee & Ross Investment Management. While that bodes well for certain sectors such as banks, it is putting pressure on “slow-growing, big dividend-paying behemoths” including telecoms and consumer staples, he says.
Although valuations are generally on the high side, his firm is still finding “pockets of value,” he says. Campbell Lee & Ross – which manages about $300-million on behalf of high-net-worth individuals and institutions – focuses on companies with attractive valuations, good growth prospects, strong balance sheets and rising dividends.
Here are five dividend stocks the firm likes right now. Remember to do your own due diligence before investing in any security. Bank of Nova Scotia (BNS - TSX) Price: $77.32
Yield: 4.1 per cent
Banks benefit from rising interest rates because it improves their net interest margin – essentially, the difference between what they make on loans and what they pay out on deposits. With about two-thirds of Bank of Nova Scotia’s loan book subject to floating interest rates, the bank stands to benefit immediately from the Bank of Canada’s two recent hikes. Furthermore, the recent rise in rates “will progressively drive earnings higher for the longerdated loan maturities,” Mr. Sissons says. Higher earnings, in turn, should support continued dividend increases for Scotiabank. Enbridge Inc. (ENB - TSX) Price: $50.61
Yield: 4.8 per cent Pipeline operator Enbridge is “a critical cog of North American energy infrastructure,” Mr. Sissons says. Yet, the share price has skidded about 10 per cent this year, hurt by low oil prices and concerns about Enbridge’s longterm growth outlook. But Mr. Sissons says another factor may be at play: the recent $37-billion acquisition of U.S.-based Spectra Energy Corp. that was paid for with Enbridge common shares. “Spectra shareholders have since been net sellers of their Enbridge shares and that, coupled with a recent earnings miss, has temporarily provided an attractive entry point for the stock,” he says. Even as its shares are in a slump, Enbridge has said it expects to raise its dividend by 10 per cent to 12 per cent annually through 2024. Open Text Corp. (OTEX - TSX) Price: $39.22
Yield: 1.7 per cent
Shares of Open Text, which sells enterprise information management software, have tumbled about 17 per cent from their high in May, hit by concerns about the rapid pace of acquisitions and the company’s elevated debt level, Mr. Sissons says. “However, the company The curious case of Canada’s flat yield curvegenerates substantial free cash flow and should reduce its debt levels relatively quickly,” he says. The modest yield may not turn many heads, but Open Text has boosted its dividend – which is paid in U.S. dollars – at a compound annual rate of about 15 per cent since it initiated a dividend in 2013. What’s more, the company maintains a conservative payout ratio, targeted at about 20 per cent of operating cash flow for the trailing 12 months.
SNC-Lavalin Group Inc. (SNC - TSX)
Price: $54.64
Yield: 2 per cent
For years, the only headlines SNC-Lavalin made were related to the bribery scandal that was engulfing the company. But with that crisis now receding, the construction and engineering giant’s stock is up about 37 per cent since the start of 2016 – and there are likely more gains to come, Mr. Sissons says.
SNC’s recent acquisition of WS Atkins PLC, in particular, “vaults the company into the upper echelons of the global construction industry. The backlog [of projects] is solid and the company will increasingly benefit from the increase in global infrastructure spending that governments across the globe are now embracing,” he says. That could lead to further increases in the dividend, which has grown at an annualized rate of 4.4 per cent over the past five years. Kone OYJ (KNYJF - U.S. OTC) Price: $56.40 (U.S.)
Yield: 2.91 per cent
Based in Finland, Kone is a global supplier of elevators, escalators and moving walkways. With a leading position in China and India and a solid presence in Europe and the Americas, the company is benefiting from the urbanization trend, particularly in emerging markets. With about half of revenue coming from product sales and half from maintenance and repairs, the company benefits from a recurring cash flow stream. “The company has generated an excellent financial performance over the last 15 years as net income has grown at a compound annual rate of 14.3 per cent,” Mr. Sissons says. The company typically raises its dividend in January and also occasionally pays a special dividend.
Bank of Nova Scotia (BNS) Close: $77.32, up 17¢ Enbridge (ENB)
Close: $50.61, up 27¢
Open Text (OTEX)

BNS-TSX

ENB-TSX

OTSX-TSX

SNC-TSX

KNYJF-OTC

AVIATION

BOMBARDIER. BOEING. The Globe and Mail. 20 Sep 2017. PM calls on Canadian companies to press Boeing
DANIEL LEBLANC 

OTTAWA - Prime Minister Justin Trudeau is calling on Canadian companies to put pressure on Boeing Co. to drop its trade complaint against Bombardier Inc., one day after vowing to continue freezing out the U.S.-based company from any federal contracts.
Earlier this month, 10 Canadian aerospace companies sent a letter to Mr. Trudeau urging him to approve a contract for 18 Boeing-built Super Hornet fighter jets.
At a news conference on Tuesday, however, Mr. Trudeau turned the tables on Canadian firms that are part of Boeing’s supply chain and urged them to direct their lobbying effort down south instead.
“I encourage people who work with Boeing across the country to tell the company the extent to which its actions against the Canadian aerospace industry is not in its interest and certainly not in the interest of Canadians,” Mr. Trudeau said.
Mr. Trudeau said he will continue to “push back” against Boeing’s effort to hurt the ability of Bombardier to sell its C Series aircraft in the United States.
“We have been very actively engaged, both directly with Boeing and with the American administration … and we will continue to stand up and defend Canadian jobs,” he said.
Mr. Trudeau has been ratcheting up the rhetoric against Boeing this week, fuelling the dispute that started with the company’s complaint to the U.S. Department of Commerce against the Bombardier C Series aircraft in April.
According to Boeing, Bombardier is dumping its newly designed aircraft in the American market at “predatory” prices because of illegal federal and provincial subsidies.
A first ruling by the U.S. International Trade Commission is expected on Sept. 25.
With his comments on Tuesday, Mr. Trudeau was in effect asking Canadian companies to take Bombardier’s side in the dispute.
However, a number of Canadian companies and industry associations have deliberately remained silent throughout the five-month-long dispute.
One signatory of the Sept. 5 letter to Mr. Trudeau, CAE Inc., scrambled after it was published in The Globe and Mail to contact federal officials and reassure them they were not asking Ottawa to stop supporting Bombardier, federal sources said.
CAE went on to issue a news release to reaffirm its support for Bombardier, arguing that its letter to the Prime Minister was not related to the dispute between Boeing and Bombardier.
“CAE disapproves the fact that both issues are being linked in recent media coverage,” the company that manufactures flight simulators said.
“CAE is the training partner of choice of Bombardier on many platforms, including the C Series, a great aircraft. We are not in a position to tell Canada what platform to buy, but to simply champion our Canadian capabilities on procurements,” said CAE president and CEO Marc Parent.
In the letter, senior executives from companies such as Héroux-Devtek, GE Canada and L3 MAS Canada emphasized the importance of Boeing for the Canadian aerospace industry.
“Prime Minister, we ask for your co-operation as we work with Boeing to keep our collective growth and innovation story unfolding here in Canada. Our partnership is deep and enduring, but it needs your engagement,” the letter said.
On Monday, however, Mr. Trudeau promised to keep up the pressure on Boeing to drop its complaint against Bombardier, using federal contracts as his main bargaining chip.
“We won’t do business with a company that is busy trying to sue us and put our aerospace workers out of business,” Mr. Trudeau said.
The Prime Minister’s threat was clearly related to the potential $6.4-billion deal for 18 new Super Hornet fighter jets that is already in the works. Still, his words could eventually apply to a much bigger prize, namely Ottawa’s plans to buy 88 new fighter jets to replace Canada’s CF-18 fleet in the next decade at a cost of nearly $20-billion.

THE GLOBE AND MAIL. SEPTEMBER 19, 2017. OPINION. Trudeau’s tough talk helps on Boeing, hinders on tax changes
CAMPBELL CLARK

Justin Trudeau's news conferences are usually full of syrupy generalities and non-answers but on Tuesday we also saw the other side of the Prime Minister, the tough guy.

It's worth noting when tough Trudeau comes out because, despite what his opponents say, it's a real part of this PM's personality. Mr. Trudeau himself usually prefers to play up his touchy-feely image as an empathic listener. But the tough side is there, like an iron hand inside rainbow-coloured cotton candy, and occasionally he displays it.

This week, he threatened Boeing: If the American aircraft manufacturer doesn't drop its trade complaint accusing Montreal-based Bombardier of dumping planes at below-market prices, he warned Monday, Ottawa won't buy their Super Hornet fighters. On Tuesday, when asked about Canadian aerospace firms that are complaining the threat might hurt their business with Boeing, Mr. Trudeau told them they should go talk to Boeing.

It was a piece of Trumpian trade bravado that you don't expect from Mr. Trudeau, who after all has been pleading for calm heads and predictable rules, not arbitrary threats, as he makes the case for the North American free-trade agreement.

But Mr. Trudeau knows that when the U.S. Department of Commerce reveals its preliminary finding Sept. 25, it's going against Bombardier. Whether or not Bombardier – a repeated recipient of government aid that appears to have sold some of its C Series jets to Delta Airlines at a loss – really broke trade rules is only one part of the equation. Preliminary findings usually back U.S. industry complaints, and the real litigation comes later. Monday will likely bring bad news.

Mr. Trudeau's tough stand is pre-emptive positioning. When well-paid Montreal jobs are threatened, the PM can't afford to look like a pushover.

It is by no means a solution. Boeing may launch a trade complaint against Ottawa, too. And Mr. Trudeau has been hoisted on his own petard: He promised not to buy Lockheed Martin's F-35 fighters, so his government had announced a stall-for-time plan for an interim order of 18 Boeing Super Hornets. Now, it's looking at second-hand Australian F-18s – still Boeing planes, which means buying Boeing parts. Yet, the tough bravado is still good politics.

But the real tough guy came out when it didn't look like good politics. Mr. Trudeau has been taking a beating on the Liberals' proposed changes to small-business taxes, from small-business groups, doctors, Conservatives across the aisle and his own nervous backbench. But he's marching ahead.

Just about everyone is telling him this is bad politics, but he's doubling down. And the wedge-politics rhetoric is getting tougher: On Monday, he essentially accused the Conservatives of standing with "wealthy doctors" instead of the nurses who work alongside them. It's uncomfortable: He was trying to dodge questions about whether he had personally gained from tax breaks over the years when he made the PR mistake of saying that his finances are in a blind trust, so he no longer has a say in the "family fortune."

In theory, the Liberal proposals, aimed at preventing people from using a private corporation to lower taxes on their personal income, are things most Canadians would probably think fair. Ordinary salary earners can't sprinkle their income to relatives, so they probably think others shouldn't get that break, either. The other breaks benefit high-income-earners. But so far, it's mostly the people who think they'll lose money who are paying close attention to this issue – and small-business groups and Conservatives are accusing the government of undermining modest small businesses that create jobs.

But Mr. Trudeau clearly doesn't just think he's got a point. He thinks he's going to win the politics on this issue.

On Monday, in Question Period, he dared Conservative Leader Andrew Scheer to promise that the Tories would undo the tax changes if they took power. Why? Because he thinks most of the public is going to side with him, and come to see the Conservatives as siding with the affluent few who control corporations.

Maybe Mr. Trudeau is right that he will turn the tide. But that's still a big gamble that many of his own MPs are telling him not to take. Mr. Trudeau isn't pleasing people with sunny ways, he's taking on a backlash with wedge politics, brushing aside complaints from his own party, and going ahead.

BOMBARDIER. BOEING. THE CANADIAN PRESS. BLOOMBERG. SEPTEMBER 20, 2017. Bombardier workers to stage walkout in Toronto over Boeing dispute
JASPER JUINEN

The union representing Bombardier’s production workers said in a statement that a rally in Toronto Wednesday, Sept. 20, is intended to give workers a voice during the ongoing dispute between the two companies.

TORONTO - The union representing Bombardier's production workers says employees at the company's aerospace plant in Toronto will walk out Wednesday — a move meant to pressure Boeing to drop a trade complaint against Bombardier.

Unifor national president Jerry Dias said in a statement that the rally is intended to give workers a voice during the ongoing dispute between the two companies.

He said Bombardier workers "are well aware that Boeing has no case, and that workers will end up paying the price as corporations fight this out."

Boeing has filed a trade complaint accusing Bombardier of selling its C-Series passenger jets to a U.S. airline at an unfairly low price with help from government subsidies.

The U.S. International Trade Commission will release the preliminary results of its investigation next week, and a finding against Bombardier could result in fines or tariffs.

Last week, Dias and Boeing officials met in Washington, D.C., where Dias encouraged Boeing to drop the complaint and seek a resolution with Bombardier.

REUTERS. SEPTEMBER 19, 2017. Airbus opens China A330 plant amid market push

TIANJIN (Reuters) - Airbus SE (AIR.PA) on Wednesday opened its Chinese completion plant for A330 jets, with hopes that an increased presence in the world’s fastest growing aviation market would help boost demand for the firm’s profitable but ageing wide-body jets.

Europe’s largest aerospace firm marked the opening of center in the northern Chinese port city of Tianjin with the delivery of the first A330 jet from the plant to Tianjin Airlines.

The center is a joint venture between the Aviation Industry Corporation of China [SASADY.UL] and Tianjin Free Trade Zone Investment Company [TJFTZ.UL] and was first agreed during a visit by President Xi Jinping to France in 2014.

Airbus already has a final assembly line for single-aisle A320 jets in Tianjin, which began operations in 2008.

At the center just opened, Airbus will perform tasks such as aircraft painting, cabin installations as well as flight tests on aircraft received from Airbus’ final assembly line in Toulouse, France.

Airbus’ main U.S. rival Boeing (BA.N), is also ramping up its footprint in the country as it vies for orders. It has said it will build a 737 completion plant in eastern China with planemaker Commercial Aircraft Corp of China Ltd [CMAFC.UL].

Reporting by Joseph Campbell in TIANJIN; Writing by Brenda Goh; Editing by Himani Sarkar

ENERGY

BROOKFIELD. Reuters. Brazil. The Globe and Mail. 20 Sep 2017. Brookfield mulls raising Renova offer

Brookfield Asset Management Inc. is considering increasing a takeover offer for Renova Energia SA by 25 per cent, in a bid to sway the two largest shareholders in the Brazilian renewablepower firm to exit their controlling stakes, two people with direct knowledge of the matter said on Tuesday.
Under terms of a revised bid, Brookfield would offer power utility Cia Energetica de Minas Gerais SA and subsidiary Light SA 11.25 reais ($4.40) a unit of Renova, said the people, who asked for anonymity because the talks remain private. Each Renova unit comprises a common share and two preferred shares.
Under terms of the bid, Brookfield would have to pay about one billion reais to win control of Renova, the people said. –

TOURISM

StatCan. 2017-09-20. Travel between Canada and other countries, July 2017

Travel abroad: 4,503,888
July 2017: 0.1% increase (monthly change)

Travel from abroad to Canada: 2,554,080
July 2017: -1.5% decrease (monthly change)

Source(s): CANSIM table 427-0005.

Record US overnight travel to Canada by plane for month of July

During the month of its 150th birthday, Canada welcomed 2.0 million US residents, down 1.1% from June, but an increase of 0.5% compared with July 2016.

Of these trips to Canada, 698,000 were same-day trips by car. This was an increase of 0.4% from June, 1.5% higher than the same month of the previous year, and the highest figure for July since 2008. The number of overnight US travellers to Canada by car increased by 0.4% from June to 663,000, and was 0.4% lower than in July 2016.

The number of US travellers making overnight trips to Canada by plane increased 1.1% from July 2016 to 390,000, a record high for the month of July. It did, however, represent a decrease of 3.9% from the previous month. Of the four most-visited provinces, British Columbia (+5.9%), Quebec (+10.9%) and Alberta (+13.6%) recorded increases in the number of US travellers by plane compared with July of the previous year while US travel to Ontario by plane decreased by 4.5%.

More overseas travellers from Europe, fewer from Asia

Canada received 535,000 residents visiting from overseas countries in July, a 2.8% decline from June and 2.6% fewer than in July 2016. However, from January through to the end of July 2017, the number of overseas travellers to Canada was still 9.0% higher compared with the same period of the previous year.

Residents of European countries made 240,000 trips to Canada in July, an increase of 3.4% from June, but 6.1% lower than in the same month of the previous year. The number of travellers from Asia declined by 8.8% in July to 175,000, and was 5.1% lower than in July 2016. For the period from January to July 2017, the number of travellers from both Europe (+3.1%) and Asia (+9.1%) were higher compared with the same period last year.

The number of travellers from Mexico declined by 8.2% in July, but this was 42.1% higher than in July 2016 when the visa requirement for Mexican citizens was in place before being lifted in December 2016.

New July record for number of Canadians flying to United States for overnight stays

Canadian residents made 3.4 million trips to the United States in July, up 1.1% from June and 0.3% higher than in July 2016. The value of the Canadian dollar, one factor influencing cross-border travel, stood at US$0.80 on July 31, compared with US$0.75 at the end of June and about US$0.77 in July 2016.

The number of Canadian travellers making overnight trips to the United States by plane increased 12.9% from July 2016 to 730,000, a record high for the month of July.

The number of trips to the United States by car rose 2.2% to 2.6 million in July. Compared with 12 months earlier, the number of Canadian residents travelling to the United States by car declined 3.0%, led by a 3.2% decrease in the number of same-day car trips and a 2.5% decline in overnight car trips.

Canadian travel overseas continues upward trend

In July, 1.1 million Canadian residents returned from trips to overseas countries, a decrease of 2.9% from June, but 9.2% more than in July of the previous year. This was also the highest figure for the month of July since modern recordkeeping began in 1972 and the eighth consecutive year of increased overseas travel by Canadians in the month of July.

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/170920/dq170920c-eng.pdf

HOUSING

The Globe and Mail. SEPTEMBER 19, 2017. Ottawa real estate firm Sakto faces allegations of money laundering. Ottawa real estate firm Sakto Corp. is at the centre of an unusual court proceeding launched by a Swiss advocacy group.
DAVE CHAN
JAMES BRADSHAW, BANKING REPORTER

Lawyers for a Swiss advocacy group pursuing allegations of financial crimes against an Ottawa real estate company are turning to Ontario's courts to obtain sensitive financial records from three Canadian banks and a major accounting firm.

For years, the Bruno Manser Fund (BMF), a Basel-based charitable group critical of deforestation in Malaysia and related issues of corruption, has investigated the family and business interests of Abdul Taib Mahmud. He is an influential Malaysian political figure who currently serves as governor of the state of Sarawak.

At the heart of the matter before an Ontario judge are the BMF's allegations against Sakto Corp., a prominent Ottawa real estate firm founded by Mr. Taib Mahmud's daughter, Jamilah Taib Murray. BMF alleges in court filings the company may have built its fortune in part by laundering ill-gotten gains from the Malaysian timber industry.

The family flatly denies the allegations, which have not been tested in court. Neither Mr. Taib Mahmud, his family nor the companies they control have been charged with a crime. In a statement provided by Sakto to The Globe and Mail, the company said: "After years of being targeted by the same foreign activists, there is no evidence to support the baseless claims leveled against Sakto."

But BMF now hopes that documents held by banks and an accounting firm in Canada may hold the key to pursuing a private prosecution – a rare procedure that allows an individual or private organization to launch criminal proceedings if it can show sufficient grounds.

As foreign funds flow into hot Canadian housing markets, concerns about money laundered through real estate have grown. In recent reports, Canada has received tepid reviews for its effectiveness at combatting financial crimes, such as money laundering and terrorist financing.

Last fall, an international evaluation by the Financial Action Task Force (FATF), an intergovernmental body that sets worldwide standards, said Canada has made progress since 2007, but still has significant enforcement gaps. FATF warned that "little is done by [Canadian financial institutions] to verify the accuracy of beneficial ownership information."

BMF says in filings with the Ontario Superior Court that it has repeatedly raised red flags about transactions among companies controlled by the Taib family. The fund has contacted the RCMP, the Financial Transactions and Reports Analysis Centre of Canada (FinTRAC), and government departments.

A FinTRAC spokesperson said the agency is prevented by law from discussing information it may have received, while the RCMP said it does not generally confirm investigations unless charges are laid.

According to claims filed in court, about 90 per cent of Borneo's primeval rain forest has been cut down, mostly to make room for palm oil plantations, over decades when Mr. Taib Mahmud served as a state official. Lawyers for BMF allege that he engaged in "notorious and recognized corruption," using his influence to award lucrative timber licences and land leases, and to require "kickback" payments.

Ms. Taib Murray, his daughter, came to Ottawa in her youth and founded Sakto Corp. in 1983, when she was in her early 20s. Since then, she and her husband, Sean Murray, have built the company into an influential force in Ottawa real estate, and the couple is recognized for their philanthropy in the city's social circles.

BMF alleges that during Sakto's first decade of operations, the Taib family "secretly channelled" more than $29-million into the firm, which posted repeated financial losses. The funds were from company shareholders, all of whom were members of the Taib family, BMF claims.

"Over the first 10 years, [Sakto] kept running losses and shareholder capital came in," Lukas Straumann, BMF's executive director, said in an interview. "What we have is unexplained wealth, and we have quite a bit of evidence of the corruption."

No public charges have been filed against Sakto or the Taib family. Instead, the BMF is pursuing a novel private path through the courts in search of more detailed evidence of alleged misconduct. But the BMF's effort to get access to financial records that would normally require a search warrant is colliding with privacy rights.

The fund is asking the court to grant a Norwich Pharmacal order, which requires a respondent to disclose certain documents or information. In this case, BMF wants Royal Bank of Canada, Manulife Financial Corp., Toronto-Dominion Bank and Deloitte & Touche LLP to provide detailed financial records about Sakto and related companies, including beneficial ownership information.

"The defendants have provided services to the Sakto Entities and have records relevant to determining the basis of the private prosecution," lawyers for BMF argue. "As the bankers, lenders, and accountant for the Sakto Entities, these financial institutions are the only practicable source of that information."

Justice Frederick L. Myers, who heard the motion, has not yet addressed its merits. But in court filings, he writes: "The relief sought by the plaintiffs is extraordinary by any measure."

In its statement to The Globe, Sakto said: "Despite its exhaustive effort to tarnish the Sakto business and its directors, BMF, by its own admission, cannot present sufficient evidence to support a legitimate complaint. Instead it must resort to an arcane procedure and in the process deny Sakto and its leadership a fundamental right to respond."

"This covert legal manoeuvre is another example of a media stunt by these activists funded by unknown foreign entities. BMF routinely employs the tactic of filing complaints to generate news on which it can self-report online," the company said, adding: "Thankfully we will have these rehashed and repackaged allegations dealt with in a formal court of law."

An affidavit sworn by BMF's Mr. Straumann alleges Deloitte provided accounting services to Sakto. It further suggests that RBC provided Sakto with commercial loans totalling at least $20-million between 1989 and 1991 to help fund a real estate development. And it shows TD provided a mortgage worth nearly $8.2-million in 1986 to help fund the purchase of another Ottawa property.

The affidavit further alleges that Manulife has been "the Sakto Group's main commercial lender since 2003." By 2006, documents show Manulife had registered three separate mortgages totalling $73-million on Sakto's Preston Square development.

Spokespeople for Deloitte, Manulife, RBC and TD declined to discuss client information.

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LGCJ.: