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September 25, 2017

CANADA ECONOMICS



VENEZUELA



The Globe and Mail. 25 Sep 2017. Trump signs proclamation restricting travel from eight countries, including Venezuela, Chad. The White House stresses that valid visas won’t be revoked as a result of the new travel restrictions to the U.S.
JILL COLVIN, Associated Press

Citizens of eight countries will face new restrictions on entry to the United States under a proclamation signed by President Donald Trump on Sunday.
The new rules, which will affect the citizens of Chad, Iran, Libya, North Korea, Somalia, Syria, Venezuela and Yemen, will go into effect on Oct. 18.
The restrictions range from full travel bans on nationals from countries such as Syria to more targeted restrictions. A suspension of non-immigrant visas to citizens of Venezuela, for instance, applies only to senior government officials and their immediate families.
The announcement comes the same day as Mr. Trump’s temporary ban on visitors from six Muslim-majority countries is set to expire, 90 days after it went into effect. That ban had barred citizens of Iran, Libya, Somalia, Sudan, Syria and Yemen who lack a “credible claim of a bona fide relationship with a person or entity in the United States” from entering the United States.
“As President, I must act to protect the security and interests of the United States and its people,” reads the proclamation.
Officials stressed that valid visas would not be revoked as a result of the proclamation. The order also permits, but does not guarantee, case-by-case waivers.
The restrictions are targeted at countries that Department of Homeland Security officials say refuse to share information with the United States or haven’t taken necessary security precautions.
“The acting secretary has recommended actions that are tough and that are tailored, including restrictions and enhanced screening for certain countries,” Miles Taylor, counsellor to acting Homeland Security Secretary Elaine Duke, said on Friday.
Unlike Mr. Trump’s first immigration ban, which sparked chaos at airports across the country and a flurry of legal challenges, officials said they had been working for months on the new rules, in collaboration with various agencies and in conversation with foreign governments.
The restrictions are based on a new baseline developed by DHS that includes factors such as whether countries issue electronic passports with biometric information and share information about travellers’ terror-related and criminal histories. The United States then shared those benchmarks with every country in the world and gave them 50 days to comply.
The eight countries are those that refused or were unable to comply.
Mr. Trump last week called for a “tougher” travel ban after a bomb partly exploded on a London subway.
“The travel ban into the United States should be far larger, tougher and more specific-but stupidly, that would not be politically correct!” he tweeted.
Critics have accused Mr. Trump of overstepping his authority and violating the U.S. Constitution’s protections against religious bias. Mr. Trump had called for a “total and complete shutdown of Muslims entering the United States” during his campaign.
The new policy could complicate the Supreme Court’s review of the order, which is scheduled for argument next month.

THE GLOBE AND MAIL, ASSOCIATED PRESS, REUTERS. SEPTEMBER 25, 2017. Trump's new, new travel ban: What's different from the others, and what's not. After months of legal wrangling over a temporary travel ban from some Muslim-majority countries, Donald Trump has widened the policy and made it seemingly indefinite. Here's who it affects, and how 
EVAN VUCCI, ASSOCIATED PRESS

Which countries are affected by the latest ban?

On Sept. 24, U.S. President Donald Trump issued a proclamation to limit travel from a handful of countries. Whereas his previous orders sought to block all travel from the listed countries temporarily, this one is indefinite and imposes different restrictions for different countries. Here's what those restrictions look like:


 Suspends all visas
 Suspends business and tourist visas
 Allows student visas only
 Allows visas except for select government officials
 Allows visas, but with extra screening
CountryImmigrant visasNon-immigrant visas
Chad
Iran
Libya
North Korea
Syria
Venezuela
Yemen
Somalia














Three countries – Chad, North Korea and Venezuela – have been added to the list since Mr. Trump's last executive order from March 6 (more on that below), and another country, Sudan, was removed entirely.

The Venezuelan restrictions are focused on government officials that the Trump administration blamed for the socialist country's slide into economic disarray, including officials from the Bolivarian National Intelligence Service and their immediate families.

In the case of North Korea, where the suspension was sweeping and applied to both immigrants and non-immigrants, officials said it was hard for the United States to validate the identity of someone coming from North Korea or to find out if that person was a threat.

But travel restrictions on the North Asian country, already under severe sanctions because of its nuclear weapons program, would be largely symbolic: Most or all of the North Koreans living in the United States are based at the country's diplomatic mission to the United Nations. North Korea does not allow its ordinary citizens to travel abroad except in special cases, like to work in overseas jobs that bring in foreign currency or to participate in international sporting events.

How will this ban be rolled out?

The new restrictions take effect at 12:01 a.m. (ET) on Oct. 18. To limit confusion, valid visas will not be revoked as a result of the proclamation. The order also permits, but does not guarantee, case-by-case waivers for citizens of the affected countries.

Unlike Mr. Trump's previous orders, there is no end date specified, though the proclamation says the Homeland Security chief can ask the president to remove countries from the list if he, the Secretary of State and the Attorney-General agree they should.

How does this affect Canadians?

As with the previous ban, dual nationals from the affected countries can travel as usual with a passport from a country not on the list, so Canadian dual citizens are unaffected.

Why are they doing this?

The measures help fulfill a campaign promise Mr. Trump made to tighten U.S. immigration procedures and align with his "America First" foreign policy vision. The White House portrayed the restrictions as consequences for countries that did not meet new requirements for vetting of immigrants and issuing of visas. Those requirements were shared in July with foreign governments, which had 50 days to make improvements if needed, the White House said.

A number of countries made improvements by enhancing the security of travel documents or the reporting of passports that were lost or stolen. Others did not, sparking the restrictions.

Critics have accused the Republican president of discriminating against Muslims in violation of constitutional guarantees of religious liberty, breaking existing U.S. immigration law and stoking religious hatred. During his campaign, Mr. Trump, called for a "total and complete shutdown of Muslims entering the United States."

North Korea and Venezuela – mostly Buddhist/Confucianist and Catholic, respectively – are the first two non-Muslim-majority countries on the list, but Anthony D. Romero, executive director of the American Civil Liberties Union, suggested this was a smokescreen for he said what was clearly a Muslim ban:

The fact that Trump has added North Korea – with few visitors to the U.S. – and a few government officials from Venezuela doesn’t obfuscate the real fact that the administration’s order is still a Muslim ban. President Trump’s original sin of targeting Muslims cannot be cured by throwing other countries onto his enemies list.

Which ban is which

Mr. Trump has been pushing for a travel ban in some form or another since January. Here's how his plan has changed over the past few months.

The Jan. 27 order

What it did: His initial travel ban affected seven countries (Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen), barring entry from citizens of those countries for 90 days and suspending all refugees from all countries for 180 days. The order came without warning on a Friday night, leaving travellers stranded in the United States and sowing confusion about whether those with dual citizenship with countries not on the list, such as Canada, would be affected. (The State Department and Homeland Security initially said they were, but then the Trump administration said they were exempt.)

What happened to it: The order was struck down in district and appeal-court rulings and then Mr. Trump issued a new order that superceded it.

The March 6 order

What it did: Mr. Trump's revised order was broadly similar to the first, but removed Iraq from the banned list and gave an advanced warning for when it would take effect. It also more explicitly outlined that dual nationals, existing U.S. citizens and permanent residents weren't affected.

What happened to it: Again, lower courts struck down the policy, but this time the Justice Department pressed the issue to the Supreme Court. The court was set to hear arguments about it on Oct. 18, a few weeks after the 90-day travel ban expired on Sept. 25.

The 'bona fide' proviso

What it did: In June, the Supreme Court issued a decision that let Mr. Trump's March 6 order go ahead, but exempted visitors from it if they had a "credible claim of a bona fide relationship" with some person or entity in the United States, understood to mean a family relationship or an authorized job or study program. Further court decisions and State Department guidelines tinkered with the definition of "bona fide" a lot over the summer; grandparents, for instance, were initially not "bona fide" enough, but it was later decided that they were.)

What happened to it: The Supreme Court was set to hear new arguments about this ban in October, but with the new Sept. 25 proclamation, they might decide to skip a decision on the March 6 policy because isn't in effect any more.

What about refugees?

The Sept. 25 proclamation doesn't address the temporary ban on refugee admissions, which expires on Oct. 24.

Mr. Trump's refugee policies and travel bans have been cited as the driving forces behind a rise in U.S. border crossings by asylum seekers who want refugee status in Canada. Under 2004's Safe Third Country Agreement between Canada and the United States, refugees who've been rejected in one country are prevented from seeking asylum in the other. This means that, if asylum seekers show up at official border crossings, authorities will turn them back. But the deal doesn't cover people who cross unofficially – so-called "irregular migration" – and then claim asylum once they're in Canada.

The legal saga: How we got here, and what could happen next

Critics have accused Trump of overstepping his legal authority and violating the U.S. Constitution's protections against religious bias each time he has ordered new travel restrictions. His first two executive orders were struck down by lower federal courts, and the Supreme Court – which allowed a limited version of the March 6 order to go ahead over the summer – was supposed to hear oral arguments about the March 6 order on Oct. 10.

A decision on that issue would be consequential not just for Mr. Trump but also future presidents who would be bound by it. But with the March 6 travel restrictions expiring, the court now has an easy way out because it could simply say that the case is no longer a live issue and therefore, in legal parlance, moot.

If state governments or civil rights groups challenge the Sept. 25 proclamation as they did the previous bans, it could stand a better chance of holding up in court, scholars and other experts told Reuters news agency. Saikrishna Prakash, a professor at the University of Virginia School of Law, suggested in an e-mail to Reuters that the new proclamation would be less vulnerable to legal attack because it is the result of a months-long analysis of foreign vetting procedures by U.S. officials:

While new claims of religious discrimination might be harder to press, experts said challengers could potentially argue that the expanded ban violates the federal Immigration and Nationality Act, which forbids the government from discriminating based on an individual's nationality when issuing visas. "Congress decided that it didn't want an immigration system that played favorites among countries," said Margo Schlanger, a University of Michigan Law School professor.

Jeffrey Gorsky, the former chief of the legal advisory division at the U.S. State Department's Visa Office, said the new ban could be viewed as overly broad in whom it applies to, keeping out all manner of people from those countries "with no evidence of adverse affect on U.S. interests."

With reports from Evan Annett and The New York Times News Service

BLOOMBERG. 25 September 2017. Venezuela Spurns Travel Ban, Calls U.S. Major ‘Rights Violator’
By Andrew Rosati  and Vivianne Rodrigues

  • Foreign Minister slams Trump in U.N. General Assembly address
  • Arreaza says Trump seeking ‘undemocratic change’ in Venezuela
  • Trump Travel Ban Now Includes Eight Countries
  • Trump Orders Travel Restrictions From 8 Countries

Venezuelan Foreign Minister Jorge Arreaza decried the U.S. travel ban on its officials and their families, saying the measure is the latest attempt by the Trump administration to force regime change in the South American nation.

Venezuela has been "threatened directly by the president of the United States,” Arreaza told the United Nation’s General Assembly on Monday in New York, calling the U.S. the world’s “major human rights violator” and saying that Trump acted “as if he were the world’s emperor.”

Following his speech, Arreaza told reporters that President Nicolas Maduro was open to holding talks with his U.S. counterpart, but reserved the right to defend his country from foreign aggression. “We’re open to dialogue, but can respond to attacks,” he said.

On Sunday, President Donald Trump restricted or suspended travel to the U.S. from eight countries, including Venezuela, in order to “protect the security and interests of the United States and its people,” according to the order’s proclamation.

The decree says the Venezuelan government “fails to share public-safety and terrorism-related information adequately” and has not been “fully cooperative” in receiving deportees.

The Venezuelan portion of the ban, which goes into effect Oct. 18, targets officials and their families “involved in screening and vetting procedures” -- specifically immigration and foreign ministries as well as investigative and intelligence police forces. The order says current visa holders “should be subject to appropriate additional measures to ensure traveler information remains current.”

Mounting pressure

The measure follows the imposition of targeted sanctions against top-ranking Venezuelan officials by both the Trump and Obama administrations, which included freezing their U.S. assets and revoking their visas. Rather than bar regular citizens’ from to the U.S., the travel ban seeks to further isolate Venezuela’s ruling socialists says, Gregory Weeks, a professor of political science at the University of North Carolina at Charlotte.

“It’s part of an overall policy to squeeze the Venezuelan government,” said Weeks. “It doesn’t really substantively change much at all.”

The Trump administration has sought to punish Maduro and his government for what U.S. officials say is a slide toward dictatorship. Last month, the Treasury Department barred trading of new debt by the government and state oil company Petroleos de Venezuela SA, or PDVSA. The move is having broader consequences, as the added scrutiny has banks seeking to avoid running afoul of the regulations. Other rounds of sanctions have targeted senior individuals in Maduro’s administration including Vice President Tareck El Aissami and PDVSA Chief Financial Officer Simon Zerpa Delgado.

Arreaza said that Trump’s recent efforts to isolate the country ultimately sought to “make Venezuelan people suffer and to force an undemocratic change in government.”

Sunday’s travel restrictions could also further deepen divisions between Trump and other Latin American leaders. At a dinner in New York last week with the presidents of Brazil, Colombia and Panama, Trump praised the good relationship between the U.S. and Latin America and enlisted the region to keep pressure on Maduro, calling his rule “disastrous."

Trump in August had said that the U.S. has “many options for Venezuela, including a possible military option” to address the crisis in Venezuela, which drew rebukes from some of the U.S.’s strongest allies in the region.

— With assistance by Fabiola Zerpa



AVIATION



BOMBARDIER. The Globe and Mail. REUTERS. 25 Sep 2017. Canada aiding Sweden in Bombardier corruption probe
DANIEL LEBLANC, OTTAWA
MARK MacKINNON, LONDON, Reuters

Canadian authorities have started to collaborate with their Swedish counterparts in the continuing corruption investigation into Bombardier Inc.’s $340-million (U.S.) contract to sell railway equipment in Azerbaijan, The Globe and Mail has learned.
Sweden’s National Anti-Corruption Unit has already charged a Bombardier employee based in Stockholm, Evgeny Pavlov, with “aggravated bribery” in connection with the awarding of the contract to install train-signalling technology along a rail line in the former Soviet republic.
As part of the investigation into the 2013 deal, Swedish police are digging into the inner workings of the Montreal-based company with offices and contracts around the world. The trial of Mr. Pavlov has shed light on a network of shell companies that Bombardier Transportation partners with in Russia and several other countries, raising questions about international business practices at one of Canada’s flagship firms.
Besides Mr. Pavlov, Swedish prosecutors have named five other employees of Bombardier Transportation Sweden as suspects in their investigation. »
A report prepared by the anti-fraud unit of the World Bank, which funded 85 per cent of the Azerbaijan project, additionally names the head of Bombardier’s Moscow office.
Swedish officials have recently sought Canadian assistance to seize documents and electronic equipment in Canada, and potentially to conduct interviews in the country, as part of a process known as a Mutual Legal Assistance Request (MLARs), sources familiar with the probe said.
One key piece of evidence the Sweden’s National Anti-Corruption Unit is seeking is a laptop belonging to one of the suspects that prosecutors believe was sent from Stockholm to Canada shortly after the investigation began, according to sources.
A spokesman for Justice Canada refused to comment on the request filed as part of the Treaty between the Government of Canada and the Government of Sweden on Mutual Assistance in Criminal Matters.
“Requests for mutual legal assistance are state-to-state requests made on a confidential basis,” Justice spokesman Ian McLeod said.
The RCMP also declined to comment.
However, sources in Canada and Europe confirmed the continuing operation on the condition of anonymity, given the confidential nature of the process.
The sources said there has been a back-and-forth between officials in Canada and Sweden as the request is being refined to ensure everything is done in accordance with the complex rules of MLARs. A small number of Mounties have already travelled to meet their Swedish counterparts to discuss the request.
“There is an exchange of information that is ongoing,” said one law-enforcement official.
Bombardier did not respond to requests for comment made on Thursday.
The development comes as Bombardier’s two main trainmaking rivals in Europe negotiate a tie-up that could leave the Canadian manufacturer the odd man out.
France's Alstom confirmed Friday it is in talks with Germany’s Siemens, but cautioned no final agreement has been reached. A deal, if struck, could leave Bombardier without a partner of its own against an increasingly strong competitor from China, CRRC Corp. Bombardier had been discussing a tie-up of its own with Siemens until recently.
A key matter in the corruption investigation is Multiserv Overseas Ltd., a shell company that was brought in as a third party on the Azerbaijan deal and more than 120 other transactions involving Bombardier. Multiserv’s shifting ownership and management structure was revealed by a major Globe and Mail investigation last year.
The company has a London mailing address, a director living in Cyprus and a changing ownership structure involving other shell companies in the Seychelles, Panama and Belize. Bombardier has in the past refused to answer questions about who was the beneficial owner of Multiserv Overseas, though evidence presented in Swedish court show the company to be controlled by two Russian businessmen considered close associates of former Russian Railways boss Vladimir Yakunin.
Multiserv Overseas is not listed as a contractor on Bombardier’s formal bid for the 2013 project, despite the World Bank’s requirement that bidders name all subcontractors they intend to use. On Bombardier’s internal documents describing how the Azerbaijan deal would work, Multiserv Overseas is inserted into the transactions as a middleman between Bombardier Transportation Sweden and the company’s local partner, Trans-Signal-Rabita.
In the $340-million Azerbaijan deal, Multiserv Overseas appears to have made an $84-million profit after buying Bombardier train-signalling technology for $20-million before selling the same equipment to Trans-SignalRabita for $104-million.
Swedish police raided Bombardier’s Stockholm office last fall and wiretapped telephone traffic for six months, recording conversations between Bombardier executives in Stockholm, Montreal, Berlin and Moscow.
The trial of Mr. Pavlov wrapped up this week, with senior prosecutor Thomas Forsberg asking the Stockholm court to find Mr. Pavlov guilty and to sentence him to five years in prison for his role, which allegedly saw him collude with Azeri officials to ensure Bombardier won the 2013 bid.
Mr. Forsberg described the evidence against the 37-year-old Mr. Pavlov – which also included internal company e-mails, as well as testimony from current and former employees of Bombardier Transportation Sweden – as “rock solid.” Mr. Forsberg said that Mr. Pavlov, in his e-mails to colleagues, had “practically written an essay about how they are in collusion” with employees of the state-owned Azerbaijan Railways.
The defence, in its closing argument, claimed Sweden didn’t have jurisdiction over the matter, since Mr. Pavlov is a Russian national who was employed by Bombardier Transportation’s Russian unit at the time of the alleged crime.
Speaking in his own defence, Mr. Pavlov pleaded innocence. “I have not done anything illegal; I just did my job. I checked everything with the lawyers,” he said in court on Wednesday. Mr. Pavlov’s defence team have argued that decisions about the Azerbaijan bid were made much higher up at Bombardier than Mr. Pavlov, a regional sales manager.
Mr. Forsberg, in his closing statement, also mentioned Mr. Pavlov’s superiors at Bombardier Transportation Sweden.
He said Peter Cedervall, the president of the Bombardier’s rail-control solutions division, and Thomas Bimer, a vice-president and director of sales, “made this possible. These people could have pressed the stop-button, but they didn’t. They made it possible for the whole thing to proceed.”
Mr. Cedervall and Mr. Bimer are among five employees of Bombardier Transportation Sweden, named as additional suspects in the case against Mr. Pavlov. In its own interim report on the affair – also entered as evidence into the Stockholm court – the World Bank’s Integrity Vice-Presidency, which investigates allegations of fraud, says top officials at the Stockholm and Moscow offices of Bombardier Transportation “appear to be directly involved in the collusive and corrupt arrangements.”
The evidence entered into the court shows Bombardier executives beyond Sweden became worried as media, police and auditors began to focus their attention on Multiserv Overseas and the Azerbaijan deal.
“This is very hot, Peter … very, very, very hot,” Laurent Troger, the president of Bombardier Transportation and one of the most senior executives in the company, said in a March 11 phone call with Mr. Cedervall that was recorded by Swedish police.
The recording of the conversation was played in court as part of the prosecution’s case against Mr. Pavlov.

The Globe and Mail. BLOOMBERG. 25 Sep 2017. CEOs urge Boeing to drop Bombardier challenge
JOSH WINGROVE, Bloomberg News

An industry group representing Canadian chief executives is calling on Boeing Co. to scrap its trade challenge against Montrealbased Bombardier Inc.
“Boeing’s petition for duties on Bombardier aircraft is baseless and should be immediately withdrawn,” John Manley, president of the Business Council of Canada, said in a statement released Sunday. “Canada must stand up to this unprecedented attack on our aerospace industry and the thousands of men and women it employs.”
Mr. Manley is weighing in ahead of an anticipated ruling on preliminary duties due Tuesday on the complaint from Chicagobased Boeing. The dispute threatens to divide Canadian industry given the complex supply chains of both firms. Bombardier is based in Canada, though Boeing drew $2.2-billion (U.S.) in revenue from the country in 2016, compared with $1.3-billion for Bombardier, data compiled by Bloomberg show.
Prime Minister Justin Trudeau and British Prime Minister Theresa May have appealed to U.S. President Donald Trump to intervene in the case. Boeing has accused Bombardier of using government subsidies to sell its C Series passenger jets at low prices.
Mr. Trudeau has also said Canada won’t proceed with an acquisition of Boeing F-18 Super Hornets so long as the firm is targeting its Canadian rival.
Boeing has given no indication it will back down, firing back earlier this month by saying Bombardier’s U.S. sales are “a classic case of dumping, made possible by a major injection of public funds.”
Bombardier says Boeing has similar “launch pricing” for its new planes as Bombardier does for its new C Series. “Boeing’s self-serving actions threaten thousands of aerospace jobs around the world,” Bombardier said in a statement earlier this month.

BOMBARDIER. The Globe and Mail. BLOOMBERG. SEPTEMBER 25, 2017. Bombardier’s turnaround challenged by threats to rail and jet businesses
VALERIAN MAZATAUD, BLOOMBERG
FREDERIC TOMESCO, BLOOMBERG NEWS

Bombardier Inc.'s turnaround plan is coming under threat from stepped-up challenges to the company's rail business and its cutting-edge jetliner.

The Canadian manufacturer risks being jilted by Germany's Siemens AG, which is now exploring a rail-equipment deal with Alstom SA of France after months of talks with Bombardier. Separately, the U.S. government is set to decide this week whether tariffs should be imposed on Bombardier's C Series aircraft after a complaint by Boeing Co.

The developments imperil Chief Executive Officer Alain Bellemare's two-year-old effort to reshape Bombardier, which has also relied on financial support from Quebec and Prime Minister Justin Trudeau's federal government. Losing out on a Siemens deal would weaken Bombardier's rail unit, its biggest business, against a bulked-up industry leader from China. An adverse trade ruling in the U.S. would hamper demand for its priciest jetliner, the C Series.

"It would be a loss for Bombardier if Alstom and Siemens come together because this would leave them in the cold," said Karl Moore, a professor of management strategy at Montreal's McGill University. "At the same time, you run the risk of the C Series being shut out of the U.S. market until the issue of duties is settled, which will take some months."

Bombardier tumbled 6.3 per cent to $2.22 at the Friday close in Toronto, the biggest decline in more than three months. The widely traded B shares are at the lowest level since May.

Alstom-Siemens

Alstom said Friday it's in talks with Siemens about a possible combination of their rail businesses, adding that "no final decision has been made." The confirmation came hours after the French government signaled it supports deeper corporate ties with Germany, suggesting a deal between Levallois-Perret, France-based Alstom and Munich-based Siemens would have political backing.

Bloomberg News reported Thursday that Siemens was negotiating with Alstom as well as Bombardier, giving the German company two options to pursue consolidation. While declining to comment specifically on its competitors, Bombardier said Friday it was weighing "multiple options" for its rail business – repeating a phrase Bellemare has used in the past.

Getting left at the altar "is a new risk" for Montreal-based Bombardier, said David Tyerman, an analyst at Cormark Securities in Toronto. "Bombardier is going to be the guy without a dance partner. If geopolitics come into play, you really don't have anybody in your corner."

For more on deal talks among rail equipment makers, click here The rail companies are looking to join forces to compete with industry leader CRRC Corp. of China, which was formed from a 2015 merger of the country's two main regional train makers. The company controls about half the global market for rail cars and locomotives, Desjardins Capital Markets estimated in a report this year, compared with 12 per cent each for Bombardier and Siemens and about 11 per cent for Alstom.

Aided by its ability to finance entire projects, CRRC has won high-profile rail orders including transit contracts in U.S. cities such as Boston, Philadelphia and Los Angeles. Bombardier missed out on a $3.2-billion (U.S.) contract to provide subway cars in New York and has been plagued by delays on major projects such as streetcar deliveries to Toronto and subway cars for Montreal.

The train business bore the brunt of Bellemare's plan, announced last October, which included 7,500 job cuts worldwide.

Boeing complaint

While Bombardier's rail business contends with the uncertain outcome of deal talks, a threat to the jewel of its commercial aircraft business is also coming to a head. The U.S. Commerce Department will issue a preliminary ruling Tuesday on whether to impose countervailing duties on the C Series, which Bombardier spent at least $6-billion to develop.

In a trade complaint, Boeing accused Bombardier of selling the single-aisle jetliner to Delta Air Lines Inc. at less than fair value, while benefiting from unfair government subsidies in Canada. Earlier this year, the Canadian government pledged $372.5-million (Canadian) to Bombardier to finance two jet programs including the C Series. Quebec's provincial government invested $1-billion in the program last year for a 49.5 per cent stake.

"The general expectation among the majority of watchers is that the ruling is very likely to go against them," said Chris Murray, an AltaCorp Capital analyst in Toronto. "Either way, the whole thing could take a while."

In June, the U.S. International Trade Commission ruled that Boeing's commercial jet business may have been harmed by Bombardier. In addition to the countervailing duties, Boeing is seeking anti-dumping duties of about 80 per cent. Bombardier says it complies with international trade regulations.

In the meantime, the trade dispute "will be an overhang for some time to come," said Cam Doerksen, an analyst at National Bank Financial. "Until that's settled it will be very hard for a U.S. airline to make a firm commitment to buy the plane."

Sales drought

With the exception of a two-aircraft order from Air Tanzania in December, Bombardier hasn't booked a major sale of C Series jets since Delta committed to buying at least 75 of the planes in April 2016. Delta testified in favor of Bombardier at International Trade Commission hearings in May, saying that it never even considered Boeing models before placing its order with the Canadian planemaker.

The sales drought is likely to pressure Bombardier's efforts to sell more planes outside the U.S. without resorting to aggressive discounting.

"Unfortunately, if there is a negative ruling Tuesday you are not going to sell any more C Series in the U.S. market for a while," said Ernie Arvai, a partner at aviation consultant AirInsight. "People will know internationally that you are desperate for orders. They will be expecting good deals."

REUTERS. SEPTEMBER 25, 2017. Siemens likely to pick Alstom for rail merger: sources
Alexander Hübner, Georgina Prodhan

MUNICH/FRANKFURT (Reuters) - German industrial group Siemens (SIEGn.DE) is likely to decide on Tuesday to pursue a multibillion-dollar rail merger with French rival Alstom (ALSO.PA) rather than Canada’s Bombardier (BBDb.TO), two sources familiar with the matter told Reuters.

The three major train and rail technology groups active in Europe have been looking at combining their businesses as larger Chinese state-backed rival CRRC (601766.SS) embarks on a global expansion drive.

“I think Alstom will make it,” one of the people said on Monday. The second person said Siemens’ supervisory board would decide the matter on Tuesday, also describing Alstom as the frontrunner.

Siemens, Alstom and Bombardier declined to comment.

Siemens and Alstom are strong in high-speed intercity trains with their ICE and TGV models. Siemens is also the leader in signaling technology, while Bombardier - whose transportation headquarters are in Berlin - is stronger in commuter and light-rail trains.

The Franco-German deal would come just as plans by German Chancellor Angela Merkel and French President Emmanuel Macron for closer integration may be undermined by Merkel’s weak showing in Sunday’s national election.

It would also represent a reconciliation of sorts between Siemens and Alstom, which snubbed the German company in 2014 to sell its energy division to General Electric (GE.N) in a deal that also saw Paris take a 20 percent stake in Alstom.

Siemens Mobility is expected to be merged into Alstom, in which Siemens would hold 50 percent plus one share, while the chief executive would come from Alstom.

The combined business would have sales of about 15 billion euros ($18 billion). That compares with CRRC’s sales of 230 billion yuan ($35 billion) and market value of $40 billion.

The decision would be a blow for planes-and-trains maker Bombardier, which faces a separate battle this week to protect aerospace jobs in Quebec and Northern Ireland amid a subsidy row with Boeing (BA.N).

Sources have told Reuters that Siemens sees Alstom as financially more stable than Bombardier, which also would have wanted to have control over a transportation joint venture - something Siemens was reluctant to cede.

Bombardier shares fell sharply on Friday after a report that Siemens was in advanced talks with Alstom.

Any combination of the three would carry considerable regulatory risks, said competition lawyer Martin Gramsch of law firm Simmons & Simmons, adding they would likely argue for the market to be considered globally to take into account the competitive threat from CRRC.

“The market for larger jets has been defined as a world market. But, for trains, markets have traditionally been described as national or European because of the different requirements such as gauges and voltages,” he told Reuters.

“A broader definition would make it easier for the parties.”

Siemens’ shares were up 0.2 percent by 1350 GMT on Monday, while Alstom’s were up 0.8 percent.

Additional reporting by Maya Nikolaeva and Tim Hepher in Paris and Allison Lampert in Montreal; Editing by Arno Schuetze, Victoria Bryan and Mark Potter

BLOOMBERG. 25 September 2017. Threats to Both Planes and Trains Bruise Bombardier
By Frederic Tomesco

  • Potential rail deal with Siemens imperiled by Alstom talks
  • U.S. set to decide on C Series tariffs after Boeing complaint
  • Bombardier Inc.’s turnaround plan is coming under threat from stepped-up challenges to the company’s rail business and its cutting-edge jetliner.

The Canadian manufacturer risks being jilted by Germany’s Siemens AG, which is now exploring a rail-equipment deal with Alstom SA of France after months of talks with Bombardier. Separately, the U.S. government is set to decide this week whether tariffs should be imposed on Bombardier’s C Series aircraft after a complaint by Boeing Co.

The developments imperil Chief Executive Officer Alain Bellemare’s two-year-old effort to reshape Bombardier, which has also relied on financial support from Quebec and Prime Minister Justin Trudeau’s federal government. Losing out on a Siemens deal would weaken Bombardier’s rail unit, its biggest business, against a bulked-up industry leader from China. An adverse trade ruling in the U.S. would hamper demand for its priciest jetliner, the C Series.



“It would be a loss for Bombardier if Alstom and Siemens come together because this would leave them in the cold,” said Karl Moore, a professor of management strategy at Montreal’s McGill University. “At the same time, you run the risk of the C Series being shut out of the U.S. market until the issue of duties is settled, which will take some months.”

Bombardier fell 6.8 percent to C$2.08 at 11:09 a.m. in Toronto after tumbling as much as 8.1 percent for the biggest intraday decline in more than three months. The widely traded B shares, which were already on a three-day losing streak before Monday, are at the lowest level in four months.

Alstom-Siemens

Alstom said Friday it’s in talks with Siemens about a possible combination of their rail businesses, adding that “no final decision has been made.” The confirmation came hours after the French government signaled it supports deeper corporate ties with Germany, suggesting a deal between Levallois-Perret, France-based Alstom and Munich-based Siemens would have political backing.

Bloomberg News reported Thursday that Siemens was negotiating with Alstom as well as Bombardier, giving the German company two options to pursue consolidation. While declining to comment specifically on its competitors, Bombardier said Friday it was weighing “multiple options” for its rail business -- repeating a phrase Bellemare has used in the past.

Getting left at the altar “is a new risk” for Montreal-based Bombardier, said David Tyerman, an analyst at Cormark Securities in Toronto. “Bombardier is going to be the guy without a dance partner. If geopolitics come into play, you really don’t have anybody in your corner.”

The rail companies are looking to join forces to compete with industry leader CRRC Corp. of China, which was formed from a 2015 merger of the country’s two main regional train makers. The company controls about half the global market for rail cars and locomotives, Desjardins Capital Markets estimated in a report this year, compared with 12 percent each for Bombardier and Siemens and about 11 percent for Alstom.

Aided by its ability to finance entire projects, CRRC has won high-profile rail orders including transit contracts in U.S. cities such as Boston, Philadelphia and Los Angeles. Bombardier missed out on a $3.2 billion contract to provide subway cars in New York and has been plagued by delays on major projects such as streetcar deliveries to Toronto and subway cars for Montreal.

The train business bore the brunt of Bellemare’s plan, announced last October, which included 7,500 job cuts worldwide. The restructuring initiatives are starting to bear fruit. The rail unit’s earnings before interest, taxes and special items amounted to 8.2 percent of sales in the three months ending July 31, up from 6.3 percent from a year earlier, according to company filings.

Boeing Complaint

While Bombardier’s rail business contends with the uncertain outcome of deal talks, a threat to the jewel of its commercial aircraft business is also coming to a head. The U.S. Commerce Department will issue a preliminary ruling Tuesday on whether to impose countervailing duties on the C Series, which Bombardier spent at least $6 billion to develop.


In a trade complaint, Boeing accused Bombardier of selling the single-aisle jetliner to Delta Air Lines Inc. at less than fair value, while benefiting from unfair government subsidies in Canada. Earlier this year, the Canadian government pledged C$372.5 million ($300 million) to Bombardier to finance two jet programs including the C Series. Quebec’s provincial government invested $1 billion in the program last year for a 49.5 percent stake.

“The general expectation among the majority of watchers is that the ruling is very likely to go against them,” said Chris Murray, an AltaCorp Capital analyst in Toronto. “Either way, the whole thing could take a while.”

In June, the U.S. International Trade Commission ruled that Boeing’s commercial jet business may have been harmed by Bombardier. In addition to the countervailing duties, Boeing is seeking anti-dumping duties of about 80 percent. Bombardier says it complies with international trade regulations.

In the meantime, the trade dispute “will be an overhang for some time to come,” said Cam Doerksen, an analyst at National Bank Financial. “Until that’s settled it will be very hard for a U.S. airline to make a firm commitment to buy the plane.”

Sales Drought

With the exception of a two-aircraft order from Air Tanzania in December, Bombardier hasn’t booked a major sale of C Series jets since Delta committed to buying at least 75 of the planes in April 2016. Delta testified in favor of Bombardier at International Trade Commission hearings in May, saying that it never even considered Boeing models before placing its order with the Canadian planemaker.

The sales drought is likely to pressure Bombardier’s efforts to sell more planes outside the U.S. without resorting to aggressive discounting.

“Unfortunately, if there is a negative ruling Tuesday you are not going to sell any more C Series in the U.S. market for a while,” said Ernie Arvai, a partner at aviation consultant AirInsight. “People will know internationally that you are desperate for orders. They will be expecting good deals.”

— With assistance by Andrew Mayeda



NAFTA



The Globe and Mail. REUTERS. 25 Sep 2017. NAFTA talks stymied by uncertainty over U.S. agenda. Free-trade negotiations continue through Wednesday in the Canadian capital.
ROBERT FIFE
STEVEN CHASE, With a report from Reuters

Donald Trump’s unpredictable personality and hostile opposition to free trade is looming over NAFTA talks as Prime Minister Justin Trudeau and his negotiating team remain uncertain as to what the U.S. President wants from a reformed pact, or whether he would even sign a deal and risk alienating his base, according to high-level sources.
Negotiating teams from Canada, Mexico and Washington sat down for a second day of talks in Ottawa on Sunday, with sources saying progress is being made around less-significant matters affecting small and medium-size business as well as the environment and competition.
The more contentious issues involving trade dispute-resolution mechanisms and rules of origin for the auto sector are expected to be raised on Tuesday evening and Wednesday when Foreign Affairs Minister Chrystia Freeland, her Mexican counterpart Luis Videgaray and U.S. Trade Representative Robert Lighthizer hold trilateral discussions.
The Globe and Mail has spoken to key players – who were only authorized to speak on background – to lay out the key challenges ahead as negotiators aim to complete a deal by February, 2018, at the latest.
“Really nobody knows what Donald Trump wants. Does he want a deal or does he want something that he can then turn down and say to his base: ‘I told you these Canadians and Mexicans are untrustworthy. This is a bad deal for America,’ ” a senior adviser to Mr. Trudeau told The Globe on Sunday. “They are not sure yet what he wants.”
In conversations with Mr. Lighthizer and U.S. Commerce Secretary Wilbur Ross, Canadian officials have gotten the impression that they have a “constituency of one” (Mr. Trump). »
Mr. Lighthizer and Mr. Ross are stuck in a “position where they want to please” the President rather than negotiate on issues of substance to benefit all three countries, the officials say.
Mexican and Canadian officials have come to the meetings wellprepared and briefed, while the U.S. negotiating team is not performing to the standards expected of them, one source said, noting the Americans have still not provided a full range of texts for the negotiations.
Complicating the talks is apparent friction between Mr. Lighthizer and Mr. Ross, who had originally been told by Mr. Trump that he “would be the big shooter” in the North American free-trade agreement negotiations, a source said.
Mr. Lighthizer, who is a more experienced trade negotiator and more comfortable with Washington politics, has been able to persuade the White House to let him run the NAFTA file. He has made it clear to his Canadian and Mexican counterparts that he answers only to the President and Congress.
Canadians are still waiting for the United States to propose a text about rules of origin for automobiles and for the Chapter 19 dispute mechanism, which the United States alleges hinders it from pursuing anti-dumping and anti-subsidy cases against Mexican and Canadian firms.
On the eve of the Ottawa talks on Friday, Mr. Ross fired a salvo when he released a study he commissioned that argued there is not enough U.S. product manufacturing – known as rules of origin – in Canadian- and Mexican-made autos.
Mr. Ross’s study claimed U.S. content of manufactured goods imported from Canada dropped significantly – to 15 per cent from 21 per cent. U.S. content in goods imported from Mexico fell even more – to 16 per cent from 26 per cent.
The U.S. study was swiftly refuted by Canadian auto-industry executives who estimate there is between 60 per cent and 70 per cent U.S. content in Canadian-assembled vehicles. U.S. content in Mexican-assembled vehicles is estimated at 40 per cent.
A Canadian adviser to Mr. Trudeau acknowledged that the “Ross statistics are false,” but said Canada should not engage in a public war of words with the Americans and should instead confront them with the facts at the negotiating table.
So far, chief U.S. negotiator John Melle has yet to table or even hint at what the Americans expect for new rules of auto origin, which presently stand at 62.5-per-cent North American vehicle content to qualify for duty-free movement between Canada, the United States and Mexico.
Another big issue that has yet to be raised and could prove to be a deal-breaker is the Chapter 19 dispute-resolution mechanism. This provides for independent, binational panels to adjudicate countervailing duty and anti-dumping cases. The United States wants these disputes solved by judicial review in domestic courts.
A senior Canadian official said Mr. Trudeau regards Chapter 19 as the “red line” that Canada will not cross. The official said Mr. Trudeau is ready to walk away from the negotiations if the United States makes Chapter 19 a make-it-or-break-it scenario.
One adviser to Mr. Trudeau cautioned that talks are at the early stage and noted the Prime Minister could play a crucial role in saving the deal because he has an excellent relationship with Mr. Trump, similar to what Brian Mulroney had with with Ronald Reagan.
The source said that Mr. Trudeau, Ms. Freeland and their team of advisers have aimed to develop personal bonds with Mr. Trump, his family, closest advisers and Mr. Ross and Mr. Lighthizer.
An August poll conducted for The Globe shows a majority of Canadians were supportive of the Trudeau strategy of building relationships with the Trump administration to advance Canadian interests.
A Nanos Research Poll, conducted between Aug. 30 and Sept. 1 of 1,000 Canadians, found that 65 per cent of Canadians were comfortable or somewhat comfortable with Canadian officials being friendly with members of the Trump administration. The margin of error of the random survey was 3.1 percentage points, 19 times out of 20.
Insiders say progress is being made to rewrite NAFTA’s Chapter 11 Investor State Dispute Settlement (ISDS), along the lines of the arrangement in the recently concluded Canada-EU trade agreement (CETA). Ms. Freeland and her team have been pushing hard on CETAstyle investor-protection provisions, including the establishment of a roster of judges to arbitrate disputes.
Canadian and U.S. negotiators are open to reforming Chapter 11 to recognize a country’s inherent right to protect on issues such as the environment or health and safety. The Trans-Pacific Partnership agreement, which Mr. Trump walked away from, had similar language.
Sources also say Canada and the United States are taking a firm stand on the enforcement of labour standards.
They want a renegotiated NAFTA pact to include penalties if Mexico tries to keep its wages low by not living up to the labour standards set by the three countries.
At the end of Sunday’s talks, chief Canadian negotiator Steve Verheul said over all the three sides are making “good solid progress … but the end game is always the hardest and impossible to predict.”

The Globe and Mail. SEPTEMBER 24, 2017. U.S.-based firms in Canada warn against Trump policies
SHAWN MCCARTHY, OTTAWA
ADRIAN MORROW, WASHINGTON

U.S. corporations operating in Canada are warning that U.S. President Donald Trump's protectionist trade policies could hurt their cross-border business while uncertainty about the future of NAFTA is impeding investment decisions.

In a survey of 53 companies to be released Monday, U.S.-headquartered firms said their biggest concerns about the bilateral trading relationship involve U.S. protectionism. These worries include the potential for major changes to, or even abrogation of, the North American free-trade agreement and the prospect for Buy American provisions.

The survey was conducted by Nanos Research for the American Chamber of Commerce in this country (AmCham Canada), which represents many of the leading U.S. multinational firms that have subsidiaries here. The American chamber is holding a meeting Tuesday with business leaders and officials from the three NAFTA countries as negotiators huddle in Ottawa for round three of the talks.

Some business leaders say they see evidence of a "chill" on investment decisions as companies await a clearer sense as to whether the NAFTA talks will founder and Mr. Trump follows through on his threat to abrogate the treaty, or it faces a major overhaul with some protectionist demands from the United State built into it, or it undergoes only modest changes.

Corporate leaders in Canada, Mexico and the United States are increasing their lobbying efforts to maintain the key elements of the existing NAFTA, and to extend liberalization to areas such as digital data flows and worker mobility. However, Mr. Trump campaigned heavily against NAFTA in last year's presidential election and has shown no signs of backing off his protectionist agenda.

Some companies are hesitant to make new investment decisions pending the conclusion of the NAFTA talks, AmCham Canada president Rick Tachuk said. "We have heard from some companies that they're just going to sit back and see where the dust settles. So that's concerning because uncertainty is not healthy for the business environment," he said.

One Canadian government source said Mr. Trump's Twitter bombast is putting a chill on cross-border business. The official, speaking on condition of anonymity, recounted talking to Canadian businesses that were considering making investments in the United States but decided not to because of the risk that NAFTA could be shredded.

The source said Ottawa is not particularly concerned by Mr. Trump's threats in and of themselves – the Canadian view is that what matters is what happens at the bargaining table – but is worried about the effect they have on business.

In the AmCham Canada survey, U.S.-based companies were asked to state their biggest concern about the bilateral relationship. Some 38 per cent cited NAFTA-related issues; 19 per cent pointed to the Trump administration generally and 11 per cent cited Buy American provisions that block Canadian operations from bidding on U.S. federal and state projects. Only 2 per cent said their biggest concern was the state of Canadian competitiveness.

Despite the trade worries, respondents remain upbeat about the short-term prospects. Some 41 per cent expect to expand their work force in the next six months, compared with 49 per cent who said it will stay the same and only 10 per cent who said it will decline.

General Electric Co. is actively lobbying on NAFTA through the Canadian Manufacturers & Exporters and has an internal group with officials in Mexico, the United States and Canada watching the negotiations, said GE Canada's vice-president of government affairs Ross Hornby.

The global company is shutting down a manufacturing facility in Peterborough, Ont., but insists that move in unrelated to NAFTA. It is also building a plant in Welland, Ont., and investing in new businesses across Canada.

"On NAFTA generally, GE's position has been 'do no harm,'" Mr. Hornby said.

He said a revamped NAFTA should include an energy chapter, to ensure there is a liberalized, North American market for energy, as well as measures that prohibit local content requirements such as Buy America provisions.

Cargill Inc. chief executive David MacLennan said he's worried about the possibility that the Trump administration will simply walk away from NAFTA if he cannot win major concessions from Canada and Mexico.

"There's definitely a chance. I'd be at a loss to handicap it – the easy answer is to say it's 50/50, which is really a proxy for saying 'I don't know.' I don't think anyone really knows," he said in a telephone interview Friday from Minneapolis, Minn.

The agribusiness giant estimates roughly 10 per cent of its revenue – $11-billion (U.S.) – is related to NAFTA trade. Cargill ships everything from beef to canola to corn-based sweeteners across the NAFTA zone. Its Winnipeg-based Canadian arm employs 8,000 people, including at abattoirs in High River, Alta., and Guelph, Ont., and at several grain- and canola-processing plants.

Mr. MacLennan's desire is that the renegotiated NAFTA mostly preserves the status quo for agriculture.

"Our hope is that it's 'no harm,' that we don't go backward, that the agreement is kept in place, that there is stability, that there is certainty in the form of the agreement for farmers," he said.

Mr. MacLennan, who met earlier this week with Commerce Secretary Wilbur Ross and has spoken by telephone with Agriculture Secretary Sonny Purdue, said the U.S. administration understands the agriculture industry's point of view. He said they are trying to balance the need to not hurt sectors that depend on free trade with their desire to help the suffering manufacturing sector.

Another Canadian government source said Ottawa's negotiation strategy includes a plan to lean on pro-NAFTA American businesses, state governors and members of Congress to put pressure on the Trump administration when there are holdups at the bargaining table.

Mr. MacLennan said he has not personally spoken with Canadian officials but should they come calling, his company will be happy to use whatever influence the company has to break logjams.

REUTERS. SEPTEMBER 25, 2017. Canadian PM sees tough NAFTA talks ahead, won't predict timeline
David Ljunggren, Adriana Barrera

OTTAWA (Reuters) - Canadian Prime Minister Justin Trudeau on Monday predicted some tough days ahead for negotiators trying to modernize the NAFTA trade pact and declined to say whether he thought the talks could meet a year-end deadline.

Officials from the United States, Mexico and Canada are in Ottawa for the third of seven planned rounds of talks. The U.S. delegation has yet to present its proposals on some of the toughest issues, prompting concerns the process to update the 1994 pact could drag on longer than planned.

“The negotiations are still under way and of course there will be more difficult discussions in some cases than others,” Trudeau told a televised news conference in Toronto.

Asked whether he was concerned the talks might not end on schedule, he replied: “The negotiations move forward at a certain pace and we respect that reality.”

U.S. trade negotiators will only partially unveil new text in Ottawa on modifying a key chapter on investment under the North American Free Trade Agreement, two well-placed sources said on Sunday.

U.S. President Donald Trump, who frequently describes the treaty as a disaster, is threatening to walk away unless major changes are made.

Canadian officials say it is still possible to meet the year-end deadline although they concede there are significant uncertainties about the timetable.

Canada’s chief negotiator on Sunday said he did not expect the U.S. side to present detailed proposals in Ottawa on major issues such as dispute settlement, the dairy sector and tougher rules for North American content on autos.

Trudeau said Ottawa’s team of officials was “moving forward in good faith” and repeated a promise to defend Canada’s system of tariffs and import restrictions put in place to defend its domestic dairy sector. The U.S. industry dislikes the measures and wants to see them whittled down.

Kenneth Smith, Mexico’s chief negotiator, told reporters late on Sunday that “we feel there is a positive environment in the negotiations.”

Canadian Foreign Minister Chrystia Freeland, U.S. Trade Representative Robert Lighthizer and Mexican Economy Minister Ildefonso Guajardo - the three top officials driving the NAFTA modernization - will meet in Ottawa on Tuesday and Wednesday, the last two days of the third round.

Reporting by David Ljunggren; Editing by Paul Simao



INTERNATIONAL TRADE



Global Affairs Canada. September 24, 2017. Annual General Meeting of the Canadian Chamber of Commerce - The Honourable François-Philippe Champagne, Minister of International Trade. Speech.

Fredericton, New Brunswick - Check against delivery. This speech has been translated in accordance with the Government of Canada’s official languages policy and edited for posting and distribution in accordance with its communications policy.

Thank you for that very warm welcome.

It’s a great pleasure to be here.

I want to thank Perrin, the Board, and his team for the invitation to speak with you this morning.

I am here to talk to you about the task Prime Minister Trudeau gave me at the outset.  He said, ‘make trade real for people’.

  • Create well-paying jobs for the middle class by opening up new markets
  • Create more choice and lower prices for consumers by tackling tariffs through FTAs
  • Create more opportunities for our SMEs to grow and to thrive

But first, let me say that the Chamber has been an important partner to governments for many years. To ‘make trade real for people’, we need you.

In my former life in business, I came to know full well the importance of Business Chambers, and particularly the role of the Canadian Chamber of Commerce in acting as a convener and advocate for business.

I especially want to thank you for playing those roles so well with respect to our NAFTA relationship, including organizing several trips to the United States to talk with business leaders and politicians about the vital economic ties between our two countries.

I’m delighted to be here with people who understand the vital link between being globally competitive and our quality of life at home.

I have often said that we are a trading nation: trade is in our DNA.  Canadians may be just 0.5 percent of the world’s population but we represent 2.5 percent of global merchandise trade.

It is no exaggeration to say our country’s current economic prosperity depends on trade. But to ensure our future prosperity, we must reorient ourselves and our approach.

As Prime Minister Trudeau said just this week, we can’t do trade exactly the same way as it was done a quarter century ago.

Too many groups, particularly women, indigenous peoples, youth and newcomers have not shared in the benefits that have come from free trade.

What good are statistics about the positive impacts trade has brought to bear on our economy, if too many do not share in it and do not feel like it benefits them?

Trade as it has long been done, though broadly positive for the majority, has not been perfect.

If it were, there’d be no political current against globalization, especially in places where traditional manufacturing has been disrupted by automation, mechanization, and offshoring.

That is why we must work harder to ensure the benefits of trade extend to the middle class, not just the wealthiest few and why we must protect and enhance the rules-based system we helped build and on which we have relied for our prosperity.

Because those rules are being challenged in sometimes unexpected ways:

China is on the rise.
Europe is dealing with creeping economic nationalism at home.
The Asia-Pacific region more broadly is booming.
Canadians are well-equipped to handle this challenge.

Looking over your membership before I arrived today, I was struck by the fact that you are more diverse, international, and innovative than just about any corporate landscape on earth.

That is a strategic asset that we can draw on to meet this challenge head-on.

Not since WWII has there been a more opportune time - a more critical time - for Canada to show leadership.

We are beacons of stability and predictability at a time when businesses are clamouring to invest and locate where those attributes exist in abundance.

So while some have said that this is the Asian Century - and we have all seen China’s unabashed drive to assume that mantle - I say this is Canada’s Century.

Now is our time.

With CETA now in force – just last Thursday - and with the modernization of NAFTA underway, our country today has preferential access to 1.2 billion consumers in the most lucrative markets in the world.

Speaking of NAFTA, as we sit here today, my colleague, Chrystia Freeland and our counterparts in Mexico and the United States are in Ottawa for the third round of negotiations.

While we discuss the imperative of diversification, we all know that most of our exports go to the United States.

The reverse is also true. In fact, our commercial relations are so strong that we not only sell things to each other, we also build things together.

And why not? We have a lot of things in common. Geography has made us neighbours. Our shared values and democratic traditions have made us the best of friends and allies.

More trade and investment with the U.S. just makes good sense – even as we diversify around the world.

The North American Free Trade area is now the biggest economic zone on the planet.

Canada, the U.S. and Mexico together account for over a quarter of the world’s GDP, with less than seven percent of the world’s population.

Millions of people in Canada, the United States and Mexico earn a living as a direct result of trade within North America.

People are putting food on their table; parents are putting their kids through school, because of a job that exists due to trade and investment links.

That is why we’re working very hard with our friends and with partners like you to modernize NAFTA.

And remember, we are the ones who helped write the rules and we are the ones who can ensure they are updated and rewritten to ensure our future prosperity.

The Trudeau government will defend what has been hard-won and boldly seize new economic opportunities so that we position Canada, indeed all of North America, as the global economic powerhouse we know it can be.

But we also have a unique opportunity to capitalize on Canada’s diversity, its openness, its trading history and our commitment to the rules-based system for managing global trade today.

There has never been a better time to diversify.

And let’s just say there is a lot of interest right now in what Canada has to offer.

And that’s in part because of Canada’s progressive approach to trade.

That is because there is one thing that differs in our approach to doing business across borders, and it’s a fundamental difference: I am out there promoting Canada’s progressive approach to trade.

At its most basic level, progressive trade is about making trade work for more people, making sure that its benefits reach those trying to provide for their families and build their future prosperity.

In practical terms, that means focusing more of our attention on the interests and ambitions of smaller companies, including those owned by women, youth, and Indigenous entrepreneurs – putting them front and centre to help them reach their full potential.

We can improve the chances of success on the part of our entrepreneurs and small business owners – the lifeblood of the Canadian economy - by including appropriate progressive elements in trade agreements.

This approach is at the core of how Canada engages with the world in every aspect of our foreign relations.

It is why we created the first gender chapter in a trade agreement of any G20 country, with Chile, and why we have stated clearly and unequivocally that progressive trade is the only way forward.

We cannot and will not dismiss entire parts of our economy.

Tackling established orthodoxy is no small challenge but our diversity is what gives our economy its might.

In CETA, we have created a new, gold-standard agreement that should serve as a model for reinvigorated and renewed trading relationships the world over.

What’s next?

The shift in the global economic centre of gravity is certainly moving from west to east.

Markets in the Asia-Pacific region are quickly emerging as new economic powerhouses for trade and investment.

Asia’s share of global GDP now exceeds that of the EU or the US, and it contributes more than 50 percent of global growth.

Asia is home to over half of the global population, increasingly affluent and mobile, and Canada recognises the opportunities this offers in terms of trade, education and tourism.

Today, China and the Asia-Pacific more broadly represent an important platform for Canadian companies.

Four of Canada’s top five trading partners, including China, are APEC members.

Increasing trade and investment with our partners in the region is essential if we are to create long-term growth and an economy that works for the middle class.      

Our government wants to ensure that Canada is well-positioned to take advantage of this opportunity.

First, we are launching a single-window hub for investment in Canada that will bring to bear all of the tools, opportunities and regulatory processes for investment into one place, facilitating new business and investment, which is exactly what we need to do if we’re going to successfully compete.

We are also working hard to win first-mover advantage.

That is why we have just launched exploratory talks towards a possible future FTA with ASEAN.    

Canada is also working very hard to expand our trade and investment relations with markets in India, Japan and China.

With regards to China, we are taking a comprehensive, strategic and longer term approach that will help our businesses not only diversify but build the relationships and footprint in Asia that we need to succeed and ensure our future prosperity.

In fact, I have had the opportunity to meet and speak with several senior business and political leaders in Shanghai, Chongqing, Zhengzhou, and Beijing about how we can further expand our growing commercial relations.

Many of you will know that Prime Minister Justin Trudeau and Chinese Premier Li announced last year that our governments are launching exploratory discussions on a potential free trade agreement with China.

The purpose of these discussions is to determine if it’s worthwhile to begin formal negotiations on a possible free trade agreement.

At the same time, the Government of Canada continues to conduct consultations with Canadians on this topic.

This provided us with a unique opportunity – spearheaded by Canada – to better understand the “ins and outs” of doing business in China and the implications of a possible trade agreement.

There are tremendous benefits to increasing our trade and investment ties with China.

China is also a complex market – we know that.

But let us remember that Canada is also in a position of strength: we are a G7 country, we helped write the rules of global trade and we have market access to 1.2 billion consumers.

Any future relationship will be on our terms, on our timetable and with our eyes wide open to the challenges.

I am so grateful for your input to date and for the Chamber’s recent and comprehensive analysis of the Chinese market and the proposition of more trade.

In Japan, we are working actively to re-evaluate and reconsider options for moving forward following the end of TPP-12 talks.

We are looking at the implications of how best to proceed post-TPP-12 in a way that secures a long-term deal with Japan and, as I have said before, sets the terms of trade for the Asia-Pacific region.

That work is critical and it takes time. But Canada spearheaded this process by hosting talks in Toronto in May of this year and we will continue to push for access on our terms and in our interests.

I have also spoken regularly to my counterparts in India to press for action on both a FIPA and CEPA.

We must match the historical, cultural and people-to-people ties we have in abundance with more trade and investment.

Our bilateral trade today stands at $8 billion.  I think we can do much better.

And don’t forget that you already have preferential market access to the South Korean market as a result of the Canada-Korea Free Trade Agreement which has been in force since January 1st, 2015.

Make sure that your company is taking advantage of business opportunities in our 6th largest export market. I visited Seoul earlier this year and was able to promote Canada and some of our key industries including forestry and the information and computer technology sector.

Another area of the world that holds great potential for Canadians is the Southern Cone Common Market – MERCOSUR - a customs union established by Argentina, Brazil, Paraguay and Uruguay in 1991.

During his trip to Argentina in November 2016, Prime Minister Trudeau committed to ongoing dialogue on deepening the Canada-MERCOSUR trade and investment relationship.

In recent months, Canada and MERCOSUR have sought to reassess the potential for free trade agreement. In 2016, the four members of MERCOSUR had a combined GDP of $3.2 trillion and a population of 260 million.

We have also secured a pathway to enhanced membership status with the Pacific Alliance, a union of Colombia, Mexico, Peru and Chile.

We are focused on delivering results for Canadians by rapidly and responsibly pursuing every opportunity to expand the opportunity for our middle class to compete and win on the global stage.

We are relentlessly focused on marketing Canadian products, creating opportunities through trade promotion, our Trade Commissioners overseas, the EDC and BDC and, crucially, an unprecedented expansion of global trading partnerships.

But we need your help in seizing the opportunities that trade policy creates.

Trade has helped build our country into a top-10 global economy with the world’s 37th-largest population.

Canada continues to have the best fiscal position among G7 countries, in terms of net debt-to-GDP ratio. We’re seeing one of the strongest paces in 12-month growth in real GDP by industry in some 17 years.

Since we were elected the Canadian economy has created nearly 428,000 new jobs, Canada’s unemployment rate has dropped from 7.1% to 6.2%, the lowest point since September 2008.

I see tremendous potential for Canadian companies.

That is why we are seizing the opportunity and creating opportunities for companies to diversify with confidence.

I know it takes a special kind of courage to set up a company, to take your business global and to take that bold step to expand and diversify abroad.

As Canada’s “Chief Global Marketing Officer,” I’m committed to helping world-class Canadian companies take advantage of the enormous opportunities that exist right now.

We can and will attract the capital, investment and interest necessary to position each and every rising entrepreneur and economic star in our country for a long time to come.

The Prime Minister has given me a very clear mandate: to increase Canada’s trade and attract job-creating investment to Canada with a view to expanding economic opportunities for all Canadians.

More trade and more investments mean more jobs, and more economic growth, to help strengthen Canada’s middle class, as well as those working hard to join it.

In Budget 2017, the Government of Canada set out a very ambitious target of increasing goods and services exports 30 percent by 2025.

This is indeed ambitious. But we believe it is achievable, and we’re delivering the tools that Canadian entrepreneurs, businesses and workers will need to help us reach that goal.

Now is our time. In order to succeed, we must stand together in our pursuit of progressive trade. Let’s seize every opportunity.  Let’s be ambitious.  Let’s make trade real for people.

Global Affairs Canada. September 22, 2017. Canada is a trading nation: International Trade Minister to address the Canadian Chamber of Commerce Annual General Meeting

Ottawa, Ontario - The Government of Canada is committed to creating jobs, growing the economy and strengthening the middle class. The Canadian economy depends on international trade, and Canada is actively engaging in new and rapidly growing markets that offer great opportunities for Canadian businesses to diversify and expand their export activities.

On September 24, 2017, the Honourable Francois-Philippe Champagne, Minister of International Trade, will travel to Fredericton, New Brunswick, to engage with business leaders from across Canada at the Annual General Meeting of the Canadian Chamber of Commerce.

The Minister will highlight Canada’s progressive trade strategy and the imperative of trade diversification for providing Canadians with greater access to new, emerging and traditional markets. Minister Champagne will underline the benefits of the recently launched Comprehensive Economic and Trade Agreement with the European Union (CETA) and will provide details regarding Canada’s strategic approach toward growing trade and investment to ensure the future prosperity of the middle class and those working hard to join it.

Quotes

“Canada’s progressive approach to trade is focused on further growing trade and investment relationships with existing partners, as well as diversifying into new and rapidly growing markets in Asia and South America. This comprehensive and strategic vision aims to help Canadian businesses expand their markets, which in turn creates more well-paying middle-class jobs for Canadians.”

- François-Philippe Champagne, Minister of International Trade

Quick Facts

  • On September 21, 2017, the date of CETA’s provisional application, 98% of Canadian and EU tariff lines will immediately become duty-free, creating new opportunities on both sides of the Atlantic.
  • In June 2017, Canada was officially invited to start negotiations on the process to become an associate member of the Pacific Alliance, a regional integration initiative founded in 2011 by Chile, Colombia, Mexico and Peru.
  • In September 2017, the 10 economies that comprise the Association of Southeast Asian Nations (ASEAN) agreed to launch exploratory discussions to determine the potential for a Canada-ASEAN free trade agreement.
  • Canada is engaged in exploratory discussions with China for a possible free trade agreement and has consulted Canadians for their views on this initiative.

The Globe and Mail. REUTERS. THE CANADIAN PRESS. SEPTEMBER 25, 2017. Trudeau urges Canadian companies to explore China’s $5-trillion market. Canada's Prime Minister Justin Trudeau and Alibaba founder Jack Ma tour the marketplace at the Gateway Conference in Toronto, Ontario, Canada September 25, 2017.
MARK BLINCH, TORONTO

Prime Minister Justin Trudeau is urging Canadian small- and medium-sized businesses to look beyond Canada's borders and explore the $5-trillion retail opportunity in China.

Trudeau is speaking at a Toronto conference today hosted by Chinese e-Commerce giant Alibaba, with politicians from all three levels of government in attendance.

Alibaba says 3,600 Canadian companies signed up to attend the event.

Alibaba is pitching Canadian businesses on accessing the growing middle class in China and the more than 460 million active consumers that use its e-commerce platform annually.

Alibaba hosted a similar U.S.-focused event in Detroit in June as it actively expands outside China.

Canadian brands already using Alibaba to sell to consumers and businesses in China include Aldo Shoes, Ocean Spray Cranberries and Clearwater Seafood.



DAIRY



StatCan. 2017-09-25. Dairy statistics, July 2017

For the first time in 2017, monthly yogurt production increased year over year, rising 7.5% from 28 695 tonnes in July 2016 to 30 851 tonnes in July 2017.

Conversely, cottage cheese production has posted year-over-year increases every month in 2017. In July, cottage cheese production rose 12.5% from the same month a year earlier to 2 036 tonnes.

Variety cheese stocks on August 1 were up 9.4% from the same day a year earlier to 37 081 tonnes.

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/170925/dq170925b-eng.pdf

The Globe and Mail. The Canadian Press. 25 Sep 2017. U.S. dairy sets NAFTA sights on supply management. American lobby aims to make ‘complete elimination’ of Canadian system a top priority when third round of talks begin this week
MIKE BLANCHFIELD, The Canadian Press

The first punches in what promises to be a bitter fight over Canada’s protected dairy industry are expected to be thrown during this week’s third round of North American free-trade talks in Ottawa.
The U.S. dairy lobby says it wants the elimination of Canada’s supply management system – which slaps imports with a 270per-cent duty – and it says it has the support of its government as NAFTA talks begin in earnest.
The Canadian industry isn’t backing down and accuses the United States of giving its farmers unfair subsidies, while politicians from Prime Minister Justin Trudeau on down have sworn to protect the much-maligned system that strictly controls the amount of foreign dairy products flowing into the country.
Jaime Castaneda, senior vicepresident with the National Milk Producers Federation, said American dairy producers had tolerated the existence of supply management, but Canada went too far when it a created a new class of milk.
Now, Mr. Castaneda said, the U.S. industry has formed an alliance with Mexico and their goal is nothing short of the full-scale destruction of supply management to solve their problem with that.
The spark was the invention of new milk protein ingredients known as diafiltered or ultrafiltered milk. They are not subject to NAFTA tariffs because they are a recent invention, so U.S. dairy producers began exporting them at a low cost to Canadian processors.
Canadian producers cried foul, saying that was costing them $200-million a year in lost revenue. The Canadian dairy industry reached a deal to sell the protein ingredients at a discount and Canada created a new class of milk to allow it, undercutting the U.S. efforts.
That enraged U.S. dairy farmers and caught the attention of U.S. President Donald Trump, who blamed Canada for driving Wisconsin dairy farmers out of business with unfair practices.
“The only way we believe we can address that issue is the complete elimination of the supply management system, the complete elimination of all tariffs and the complete free flow of dairy products among the United States, Mexico and Canada,” Mr. Castaneda said prior to his arrival in Ottawa.
Mr. Castaneda said he realized this is “very political in Canada,” but the time has come to end a system where you “have a cartel imposing higher prices for consumers in Canada,” and that has faced widespread international criticism.
“Our government has heard us loud and clear about this issue,” he added.
The response from Canada’s dairy lobby was, essentially, bring it on.
Yves Leduc, director of international policy for the Dairy Farmers of Canada, said U.S. legislation guarantees tens of billions of dollars in subsidies and support to the American agriculture industry.
“It’s double standards here,” he said. “They’re getting all kinds of subsidies that allow them to be competitive in the world markets. Having that advantage, they want to have access to our market.”
Agriculture Minister Lawrence MacAulay and Andrew Leslie, the parliamentary secretary to Foreign Affairs Minister Chrystia Freeland for Canada-U.S. relations, are to meet agricultural sector representatives Monday in Ottawa to discuss the NAFTA talks.
“Dairy trade between Canada and the U.S. massively favours the U.S., by a ratio of 5-to-1,” said Guy Gallant, Mr. MacAulay’s spokesman. “Canada is the second-largest export market for U.S. dairy products, surpassed only by Mexico. We will continue to support our dairy farmers, supply management system and all of our agricultural interests.”
Dairy has been targeted in other recent trade negotiations. Under the now defunct TPP, which Mr. Trump torched, Canada would have raised the amount of foreign dairy entering Canada by 3.25 per cent. That angered the Canadian industry and forced the previous Conservative government to table a multibillion-dollar compensation package.
Canada also agreed to accept more European dairy products under the Comprehensive Economic and Trade Agreement (CETA), most of which went into force last week under what is known as provisional application.
Mr. Castaneda said the CanadaEuropean Union pact has undermined the U.S. and Mexican dairy industries because it allows for geographical indications that provide the EU exclusive use of cheese names such as Asiago, Gorgonzola and feta.
“Obviously, Canada is going to tell us, ‘Hey, there’s nothing I can do, I already have an agreement with Europe,’ ” he said, adding that his organization might launch a World Trade Organization challenge of those CETA provisions.
Peteris Ustubs, the EU ambassador to Canada, shrugged off any potential challenge to EU’s geographical indications in trade deals.
“This is established EU policy,” he said. “We have geographical indicators in all our EU trade agreements. We will continue to use geographical indicators.”


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LGCJ.: