IMF

IMF. September 21, 2017. Corruption in Latin America: Taking Stock. Systemic corruption drains public resources and drags down economic growth
By  David Lipton, Alejandro Werner, Carlos Gonçalves

Corruption continues to make headlines in Latin America. From a scheme to shelter assets leaked by documents in Panama, to the Petrobras and Odebrecht scandals that have spread beyond Brazil, to eight former Mexican state governors facing charges or being convicted, the region has seen its share of economic and political fallout from corruption. Latin Americans are showing increasing signs of discontent and demanding that their governments tackle corruption more aggressively.


In this first part of two blogs, we look at how corruption in Latin America compares to other regions and explain why it is so difficult to combat. Part of the answer lies in the fact that systemic corruption is so endemic to the fabric of society, that changes in behavior require a major shift in expectations. As corruption drains public resources and drags down economic growth in multiple ways, the IMF has committed to work together with our members to confront the problem.

Corruption exists in many forms

Corruption—the abuse of public office for private gain—involves illicit payments or favors and how they are distributed. However, it can take different forms. It can occur at a “grand” or political level and/or at the “petty” or bureaucratic level. When corrupt behavior is so pervasive and entrenched, it can become the norm. In these systemic cases, corruption can even affect the design and implementation of policies, and skew regulatory or state decisions such as the case of Ukraine.

Corruption could also involve individual projects and how they are awarded or renegotiated. A prominent recent example is the construction firm Odebrecht, which spent considerable resources buying the support of key public officials in exchange for contracts in several Latin American economies. Other forms of corruption occur at lower tiers, including how licenses and zoning rights are granted. While corrupt activities can be initiated either on the supply (offering a bribe) or demand side (asking for a bribe), in practice it is often hard to separate the two.

The corruption trap

Given its high social costs, why is it so hard to successfully fight corruption? As in any type of social interaction, individual beliefs and expectations are crucial. When systemic corruption is the norm, people believe that other people are accepting or offering bribes. Given these beliefs, deviating from foul play is costly from the point of view of the individual. Like in the Odebrecht example, construction companies offering bribes are more likely to get projects than ones that do not—even if the latter are more efficient. Moreover, this inefficient equilibrium is self-perpetuating because companies and politicians can collude and use proceeds from past corrupt actions to secure future benefits at the expense of society.

Countries need forceful policies that lead to changes in social perceptions so corruption is seen as the exception rather than the rule. And as corruption falls, governments will more easily detect those who remain corrupt because they will stand out.

But achieving this realignment in incentives and behavior is not easy. Fighting corruption is a collective action problem with political dimensions. Isolated efforts are not likely to work. A multifaceted and resolute push is needed to initiate positive dynamics out of the bad equilibrium. For that, strong leadership and society’s support are key.

Corruption is still a problem in Latin America

Corruption is difficult to measure, but different measures of corruption perceptions correlate quite strongly. Across these different measures, Latin America and the Caribbean appear on par with other emerging market economies, but fare substantially worse than advanced economies.



At the same time, regional averages mask a great deal of variation across countries. Corruption perceptions in some countries, such as Chile and Uruguay, are similar to levels seen in advanced economies. Interestingly, Chile and Uruguay also score well in other institutional and governance indicators, and have relatively higher income per capita levels. The rest of the region does not score as well. To varying degrees, this reflects poor law enforcement, lack of fiscal transparency, bureaucratic red tape, loopholes and weak contractual frameworks in public procurement and investment, and weak governance in state-owned enterprises.



Limited progress

It is not easy to track concrete improvements in Latin America because some measures are not fully comparable across time. Moreover, perceptions of corruption may in fact rise even when corruption falls because more is being investigated and uncovered.

While there are some cases of significant improvement over the past 20 years in emerging markets, there are fewer success stories in Latin America. For example, control of corruption in Honduras has noticeably improved (though remains high), reflecting recent actions regarding the police force, the social security administration, and the tax administration. Overall, however, most changes in Latin America are relatively small. Corruption is hard to get rid of once it’s there.



The cost of corruption

Previous studies show that corruption can hinder sustainable and inclusive growth. With systemic corruption, the state’s capacity to perform its core functions is weakened, making costs macro-critical. In addition, higher corruption tends to be accompanied by higher inequality. Some commonly recognized costs evident in parts of Latin America include: lower provision of public goods (which hurts the poor disproportionately), misallocation of talent and capital through distorted incentives, higher levels of distrust in society and lower legitimacy of government, higher economic uncertainty, and lower private and foreign investment.

Nevertheless, it is hard to statistically pin down the precise impact of corruption on development since causation runs both ways. Our illustrative estimates suggest that an improvement in corruption from the lowest quartile to the median could raise per capita income by about $3,000 in Latin America over the medium term, although part of this gain reflects coinciding factors like overall institutional improvements.



Window of opportunity

Corruption in Latin America remains too high. The latest surveys tell us that the public is losing patience, which creates a window of opportunity for national leaders. Developing and enforcing a coherent strategy to fight corruption is difficult, entails learning by doing, depends on country circumstances, and is one part of a broader development strategy. But drawing from international and regional experience can provide insights and guidance to combat corruption. Our next blog will offer some concrete suggestions for Latin America.

IMF. September 20, 2017. Growth That Reaches Everyone: Facts, Factors, Tools. Over 200 million people around the world are unemployed, despite overall economic growth
By Rupa Duttagupta, Stefania Fabrizio, Davide Furceri, and Sweta Saxena

Economic growth provides the basis for overcoming poverty and lifting living standards. But for growth to be sustained and inclusive, its benefits must reach all people.

While strong economic growth is necessary for economic development, it is not always sufficient.

Over the past few decades, growth has raised living standards and provided job opportunities, lifting millions out of extreme poverty. But, we have also seen a flip side. Inequality has risen in several advanced economies and remains stubbornly high in many that are still developing. This worries policymakers everywhere for good reason. Research at the IMF and elsewhere makes it clear that persistent lack of inclusion—defined as broadly shared benefits and opportunities for economic growth—can fray social cohesion and undermine the sustainability of growth itself.

We synthesize the lessons from our work with countries, and our research on policy options to mitigate growth-equality tradeoffs and to foster inclusive growth in a note for the meeting of the G20 leaders in Hamburg, Germany, this past July.







A few facts

Lack of inclusion results in both unequal outcomes and unequal opportunities. Income inequality—the most widely cited measure of inequality of outcomes—has been declining, when the world is considered. The decline is due in large part to strong growth in many emerging market and developing economies, although two-thirds of global inequality is still attributable to differences in average income between countries.

However, if the countries are considered individually, income inequality rose sharply in many places. In the most advanced economies, the bulk of the gap opened from the 1990s until the mid-2000s. In emerging market and developing economies, inequality is still high, even though it declined in recent decades in many of them.

Lack of inclusion also manifests itself in unequal access to jobs and basic services, such as health and education. To cite just a few examples: over 200 million people around the world are unemployed, with youth unemployment at alarming levels in many countries. Mortality rates for some segments of the population are increasing, including in the United States.

Twenty percent of adults in advanced economies remain excluded from formal access to finance: for example, they do not have an account with a financial institution. Finally, wide-spread gender discrimination has led to persistent differences in health, education and incomes between men and women in large parts of the world.

Technology and economic integration have brought large benefits to many economies, but the benefits have not always been broadly shared. Both technology and trade have been driving forces behind growth and productivity, and lowered prices, greatly benefitting the poor who spend a large share of their incomes on food, clothing, and other basic goods.

However, technology has increased the demand almost exclusively for skilled labor, while trade has sometimes displaced lower-skilled workers. Greater integration of economies has also resulted in relocation of factories and greater use of equipment, displacing workers.

There are options to encourage growth for all

So, what can be done to foster inclusive growth?

The answer is not to hold off on reforms that boost productivity and growth but rather to focus on policies that offer opportunities for all. Policymakers must design measures that can mitigate potential compromises between the objectives of raising growth and reducing inequality.

Several options are available to accomplish this.

For example, more—and more efficient—spending on roads, airports, power grids and education can create jobs and boost economic growth. Broadening access to financial services—combined with measures to ensure financial stability—gives more people and firms the opportunity to consume and invest, as happened recently in India, Mexico, or Rwanda.

Assistance with job search and job matching as well as training programs can help the jobless to find work that matches their skills—countries such as Finland and Germany, where the participation in such programs is the highest among European Union countries, have the lowest long-term unemployment rates. Better property rights that boost security to individuals encourages labor mobility, discourages informal work, and supports inclusive growth.

Fiscal policy is a powerful instrument for ensuring inclusive growth and has played a key role in addressing inequality. For example, closing the outcome gaps in education and health between advantaged and disadvantaged groups can reduce inequality and promote growth; social benefits, such as cash transfers can help protect the most vulnerable; and revenue mobilization raises the needed financing for social spending and may also contribute to lowering inequality. Design matters so that the fiscal policy mix can best balance equality and efficiency.

For trade and technology, domestic policies go a long way in translating strong growth to growth that is also inclusive. Indeed, previous IMF studies have shown the importance of how governments design their policies: for example, measures that encourage foreign trade boost growth, but can increase inequality if they displace low-skilled workers in the process. In contrast, attendant reforms, such as accessible education, targeted to raise income and productivity of low-skilled workers, can boost growth while reducing inequality.

Extending the fruits of growth to the widest possible group of people is not easy and clearly requires a global effort as recognized by the G20. But it is not impossible. The IMF will continue to work with policymakers around the world—through research, technical assistance and surveillance work—to help achieve this goal.

________________

CANADA ECONOMICS

NAFTA

The Globe and Mail. 26 Sep 2017. Freeland pledges to protect workers in NAFTA negotiations. Opposition parties accuse Liberals of failing to stand up to U.S. in auto, resource and dairy sectors. While some Canadian advisers say talks have stalled because nobody knows what U.S. President Donald Trump wants, Mr. Melle rejected that notion.
ROBERT FIFE STEVEN CHASE

Canadian workers have legitimate anxiety about the way international trade can lead to a race to the bottom in labour standard and can erode their own living standards and wages. Those concerns, our government takes seriously. Chrystia Freeland Canadian Foreign Affairs Minister
Foreign Affairs Minister Chrystia Freeland has vowed in Parliament that Canada will defend its automotive, resource and dairy sectors from any U.S. assault at the NAFTA bargaining table that could cause job losses for Canadian workers.
The Liberal government was put on the defensive on Monday for the first time since negotiations on the North American free-trade agreement began as opposition MPs voiced concerns that Ottawa is not standing up to U.S. President Donald Trump’s administration.
“We are fighting very hard at the NAFTA negotiating table for the interests of all Canadian workers. That very much includes workers in the auto sector,” Ms. Freeland told the House of Commons.
“It very much includes workers in the natural resources sector and we are fighting hard for an energy chapter.
“The interests of Canadian workers are absolutely at the heart of our negotiating strategy and we are going to defend them.”
The Conservative Party, which had largely refrained from criticism of the government’s handling of NAFTA talks during the party leadership race, changed tactics on Monday with MPs accusing the Liberals of failing to stand up for auto and forestry workers and Canadian dairy farmers.
“I have yet to hear the Prime Minister stand up for our auto industry,” Conservative foreign affairs critic Erin O’Toole told the House. » “I have yet to hear our Prime Minister stand up for our softwood-lumber industry. It is time for the Prime Minister to pull up his fancy socks and start fighting for Canadian interests.”
The NDP also jumped in the fray, accusing the government of failing to defend Canadian auto jobs and stop any U.S. move to dismantle Canada’s supply-management system for dairy farmers.
“When it comes to our dairy farmers, we will defend their interests vigorously at the NAFTA negotiating table,” Ms. Freeland said. “We will fiercely defend the national interest and promote our values.”
Outside the House, Ms. Freeland also said Canada had tabled labour standards at the negotiations along the lines of the Canada-European Union free-trade deal to ensure that Mexico can’t take advantage of its lower wages to steal jobs away from Canada and the United States.
“Canadian workers have legitimate anxiety about the way international trade can lead to a race to the bottom in labour standard and can erode their own living standards and wages,” she said. “Those concerns, our government takes seriously.”
The Foreign Affairs Minister appeared to express frustration with the Trump administration on Monday for not presenting substantive proposals on key issues that it has proclaimed as necessary to modernize NAFTA.
“We haven’t yet received proposals from the United States on these more contentious issues,” she told a news conference. “Canada is ready. Our positions are very clear and we look forward to having really constructive conversations with our American and Mexican partners once actual proposals that we can respond to are on the table.”
The Trump trade team, led by U.S. Trade Representative Robert Lighthizer and Commerce Secretary Wilbur Ross, has listed higher U.S. automotive content, Buy America on infrastructure such as pipelines and an end to trilateral trade-dispute mechanisms as top objectives in the talks aimed at reducing its trade deficit, largely with Mexico.
Ms. Freeland will host her U.S.
and Mexican counterparts for dinner at Ottawa’s National Arts Centre on Tuesday evening. It’s the same place where former prime minister Pierre Trudeau hosted U.S. president Ronald Reagan in March, 1981. The NAFTA ministers’ formal meeting will take place on Wednesday.
High-level Canadian advisers to Ms. Freeland have told The Globe and Mail that the talks have been stymied because no one knows what Mr. Trump wants or whether he would sign a new NAFTA deal and risk alienating his base.
The chief U.S. negotiator, John Melle, rejected the notion that NAFTA talks were stalled and insisted they are progressing at a good pace.
“We’ve been working very hard so I don’t see a problem,” he told reporters on Monday. “We’re moving across the board, so it’s very ambitious.”
Ms. Freeland, who is in charge of NAFTA talks, agreed that the negotiations taking place in Ottawa since Saturday made solid progress on “bread and butter” issues that matter to Canadian businesses, such as electronic forms at the border, automatic declaration of origin and regulatory harmonization.
But she also acknowledged the inability of the United States to table its key demands makes it difficult to meet Washington’s goal of concluding a deal by the end of the year. The United States wants a deal before next year’s U.S. midterm congressional elections while Mexico wants the talks over before its presidential election in 2018.
“We understand that our partners face some political constraints, which have encouraged them to seek a conclusion as quickly as possible,” Ms. Freeland said. “We also understand that political uncertainty isn’t good for the economy of any of the NAFTA countries. So we are much interested in concluding this as quickly as is humanly possible.”
When it comes to rules of origin, the United States wants to set a floor for how much of a particular product must be made in North America – or even in the United States – to qualify for duty-free movement within the NAFTA zone of countries. Canada and Mexico would very likely oppose any move to set a bar for domestic content from any one NAFTA country.
The Americans are also seeking to scrap Chapter 19 of the deal, which allows one country to appeal another country’s punitive duties to a binational trade panel. Canada is vowing to walk away from the negotiating table rather than give it up.
The United States has not publicly declared an interest in dismantling Canada’s heavily protected dairy market, but a list of NAFTA objectives has said the White House favours “reducing or eliminating remaining tariffs” that keep U.S. agricultural goods from reaching Canadian or Mexican shelves.

The Globe and Mail. 26 Sep 2017. Unifor’s Dias emerges as key voice on NAFTA. Tough-talking union president, representing more than 300,000 Canadian workers, has become a constant presence in trade talks. Mr. Dias has access to the most powerful people on Parliament Hill – a far cry from the era of Stephen Harper’s Conservatives.
LAURA STONE

I’m a pretty tough guy to bluff.

Jerry Dias National president of Unifor

Shortly after 8 a.m., Jerry Dias’s phone rings. The national president of Unifor, the largest private-sector union in Canada, is having breakfast at a downtown Ottawa diner, preparing for the third round of talks on the North American freetrade agreement.
It’s a topic that elicits strong feelings from the born-and-bred labour activist, who proudly admits he doesn’t censor himself in expressing his opinions.
“The only way this thing gets done by the end of the year is if the U.S. gets off their crap,” Mr. Dias said, sipping black coffee.
“They really do work on the premise that everybody is stupid, which I find fascinating.”
The subject of his ire, this time, is U.S. President Donald Trump’s Buy American strategy: a vague proposal designed to benefit U.S. companies with nothing in return for Canada or Mexico.
“They’re trying to be the bully and I find it quite funny,” said Mr. Dias, who casually refers to Mr. Trump as a “complete lunatic.” “I’m a pretty tough guy to bluff.” It would be easy to dismiss Mr. Dias’s comments themselves as bluster: the musings of a workingclass outsider far removed from the buttoned-up bureaucrats at the negotiating table.
But then comes that early morning phone call.
“Should I take this?” Mr. Dias asks. He turns the phone to show the caller ID: Steve Verheul, Canada’s chief NAFTA negotiator.
“We’re going to have dinner,” Mr. Dias said later, “and we’re going to get at it.”
Breakfast was just the first stop for Mr. Dias in a full day that included high-level meetings, an appearance at a rally and frequent phone calls on downtown Ottawa sidewalks as he walked from one event to another.
As Canada prepares to host the third round of free-trade talks, Mr. Dias – a compact, thick-haired, tough-talking 58-year-old who represents more than 300,000 workers in the auto and energy sectors – has emerged as a major player in the negotiations. (Unifor, which formed four years ago from an amalgamation of the Canadian Auto Workers union and the Communications, Energy and Paperworkers Union of Canada, also represents employees at media companies, including The Globe and Mail.)
Mr. Dias has been a constant presence at the talks – he is holding a NAFTA-themed cocktail party on Tuesday night in Ottawa – and has access to the most powerful people on Parliament Hill.
Along with Mr. Verheul, Mr. Dias met last week with Gerald Butts, Prime Minister Justin Trudeau’s principal secretary. The two discussed the recent claims from U.S. Commerce Secretary Wilbur Ross that automobiles made in Canada and Mexico do not have enough content manufactured in the United States. “I can tell you, Wilbur is wrong,” Mr. Dias said. “They’re posturing.”
His insider access is a far cry from the era of Conservative prime minister Stephen Harper, whom Mr. Dias said he met only once, when he ran into him at a Toronto Raptors basketball game. “He had a charisma bypass operation years ago, and it was a total success,” Mr. Dias said.
Mr. Dias said he still considers himself a New Democrat because of the party’s historic ties to the working class. But he said he shifted away from the party during the 2015 election, when leader Tom Mulcair proposed balanced budgets and Mr. Dias’s sole concern was that the Conservatives be defeated. He said the Liberals, including Mr. Butts, reached out to him repeatedly during the campaign. The Trudeau government now regularly consults Mr. Dias and other union leaders.
“[Mr. Trudeau] is the first prime minister I can think of in a long time that talks openly about having a strong labour movement in Canada,” Mr. Dias said. “He doesn’t view us as the enemy. He sees us as a natural ally in trying to build a strong economy. And we’re not used to that.”
If Mr. Dias has anything in common with Mr. Trump – aside from an affinity for the camera – it’s his belief that NAFTA has sent jobs to Mexico, where workers are paid much less.
It’s an issue that is playing out in Ingersoll, Ont., where union workers at the General Motors Cami Automotive assembly plant are on strike to demand more job security. The company shifted production of another GM vehicle to Mexico during the summer, a move that will result in hundreds of layoffs.
Mr. Dias calls the situation “the poster child for what’s wrong with NAFTA.”
He stops and paces for about 20 minutes as he argues on the phone with a senior GM executive. “Another Christmas card I won’t be getting this year,” he says as he hangs up.
Mr. Dias is using his new-found platform to push for stronger labour standards in the new NAFTA, including for Mexican workers, and is urging Canada to walk away from the talks if they are not included.
“There has to be an overhaul [of the agreement]. Because if it’s a tweak, we’ll be opposing it strenuously,” Mr. Dias said.
“It’s not like I’m this greedy union thug that doesn’t get it. I get it. Profitable companies are a wonderful thing, and that’s what I want. … But there’s also got to be some fairness in the damn thing.”
Mr. Dias, who got his start on the shop floor at de Havilland Aircraft in Toronto, said he is in regular contract with union members. He makes $154,000 a year as national president. “I’m the local guy that did well,” he said.
Most of all, Mr. Dias said he himself is surprised by his active involvement on the trade file.
“If we weren’t here, it would be a much different conversation,” Mr. Dias said. “The Canadian government is allowing me to play my role.”
He adds, “Well, I’m going to anyway.”

REUTERS. SEPTEMBER 26, 2017. U.S. homes in on NAFTA labor, investment as top officials join talks
Lesley Wroughton, Adriana Barrera

A sign is pictured where the third round of NAFTA talks involving the United States, Mexico and Canada is taking place in Ottawa, Ontario, Canada, September 23, 2017. REUTERS/Chris Wattie
OTTAWA (Reuters) - Talks to modernize NAFTA kick into higher gear on Tuesday when top officials from Canada, the United States and Mexico join the negotiations in Ottawa where the U.S. is expected to propose draft text on labor, investment and intellectual property.

Labor union leaders of the two wealthier NAFTA nations say laxer labor standards and lower pay in Mexico have swelled corporate profits at the expense of Canadian and U.S. workers, making the issue one of the major battles of the NAFTA talks.

Officials with knowledge of the upcoming U.S. proposal said it would not detail wage levels for workers. Mexican business leaders have argued that workers’ rights and pay is an internal issue for each country to resolve.

U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexico’s Economy Minister Ildefonso Guajardo will join the talks for the last two days of the current round. The next negotiations will be in Washington in early October.

The countries are rushing to reach an agreement by the end of the year before Mexico’s presidential campaign.

Chief U.S. negotiator John Melle said last week the U.S. side will present new text proposals in the current round where he said “more challenging issues will start taking center stage.”

Asked by reporters in Ottawa about the lack of specific proposals on key issues, Melle said, “we’ve been working very hard so I don’t see a problem.”

The thorniest issue in the talks, NAFTA’s rules of origin that determine how much of a product needs to originate in the NAFTA region, will be discussed on Tuesday, according to a copy of the agenda obtained by Reuters, but the United States has still to present its demands.

The Trump administration wants more substantial U.S. content in autos, the main source of the $64-billion trade deficit with Mexico and the $11-billion deficit with Canada.

The U.S. is expected to partially unveil new text on a NAFTA chapter on investment, avoiding details about possible changes to Chapter 11 of NAFTA, an investor state dispute mechanism that allows an investor from a NAFTA country to sue a member government.

BETTER STANDARDS

In a Sept. 25 letter to Lighthizer, Jerry Dias, president of Canada’s UNIFOR labor union, called for enforceable rules to protect worker rights under NAFTA and expressed concern that the U.S. proposal closely resembled text outlined in the Trans Pacific Partnership trade pact, which Trump withdrew from.

Dias said the TPP language had “major limitations ... and does not provide the fundamental change in NAFTA.”

U.S. Congressman Sandy Levin of Michigan told the Council on Foreign Relations on Monday cautioned that Democrats would not support a revised NAFTA agreement without “dramatic change” in Mexico’s labor standards.

“Mexico’s so called ‘comparative advantage’ not only condemns numerous Mexican workers to working in or near poverty, but it lowers wages and rips away jobs from workers in the United States, especially in the auto industry,” he said. “Mexico is a democratic nation with an authoritarian type labor structure.”

(Refiles to change ‘hones in’ to ‘homes in’ in headline.)

Additional reporting by David Ljunggren; Editing by Nick Zieminski

BLOOMBERG. 26 September 2017. Sacred Canadian Dairy Cows Roam Fringes of Trump’s Nafta Fight
By Josh Wingrove , Sandrine Rastello , and Jen Skerritt

• Agriculture on agenda Tuesday at 3rd round of talks in Ottawa
• U.S. has yet to detail proposals on dairy, other key issues

Just before midnight one spring evening, Canada’s envoy in Washington got a call from Commerce Secretary Wilbur Ross.

Farmers in U.S. House Speaker Paul Ryan’s home state were up in arms over Canada’s rules and had gotten President Donald Trump’s ear. Ross was looking to David MacNaughton for help.

“He said, ‘the President’s in Wisconsin -- I’ve never heard him so upset,’” MacNaughton later recalled in a speech in Ottawa. According to MacNaughton’s account, Ross continued: “There are a bunch of dairy farmers that are going bankrupt and it’s all because of Canada. What are you going to do about it?”

Despite that bluster, negotiators hashing out a revamp of the North American Free Trade Agreement in Ottawa this week still haven’t received U.S. proposals on the most contentious issues, including dairy, which was left out of the current Nafta but has been a lightning rod in all recent Canadian trade talks. It’s expected to end up on the table again, with the Canadian government pledging to dig in.

“We intend to defend supply management and the interests of Canadians in these negotiations,” Prime Minister Justin Trudeau said Monday at press conference in Toronto.

Presidential Threats

Agriculture is on the agenda Tuesday and Wednesday in the third round of talks between Canada, the U.S. and Mexico. The trio of ministers arrive to join talks Tuesday. When and where dairy comes up will be a key test of the link between Trump’s words and the actions of his negotiators. Emily Davis, a spokeswoman for U.S. Trade Representative Robert Lighthizer, declined to comment when asked if the U.S. will press for dairy reform in Nafta talks.

“There’s less pressure on that than was expected,” according to Quebec Premier Philippe Couillard, whose province is home to the most dairy farms in Canada. That may be because the U.S. doesn’t want to open up its own system of subsidies, he said last week in an interview at Bloomberg’s headquarters in New York.

“When you start putting something on the table, you have to be sure that the end result is exactly what you wish for,” Couillard said, adding he doesn’t take Trump’s public threats as gospel since in his view they are “mainly designed for the internal U.S. political environment.”

Industry, too, is in a holding pattern pending specifics from U.S. negotiators. “We haven’t really heard what he wants from the Canadian market,” Pierre Lampron, head of the Dairy Farmers of Canada lobby group, told lawmakers in Ottawa last week during Nafta hearings. The group anticipates the issue could come up in talks, but says the best scenario is for daily to be kept out of Nafta. “Our defensive position is not to give him more access to markets.”

Perennial Target

Trump’s Wisconsin complaint didn’t actually have much to do with Nafta. The U.S., facing an oversupply of milk, was complaining about Canadian restrictions on ultra-filtered milk, a concentrated ingredient used to boost protein content in cheese and yogurt. “Canada has made business for our dairy farmers in Wisconsin and other border states very difficult. We will not stand for this. Watch!” the president said on Twitter in April.

The sector shouldn’t even be on the table, according to David Froelich, director of the Teamsters Canada dairy division, which represents about 5,000 workers in the industry. “The dairy supply chain wasn’t part of the original Nafta and it doesn’t make sense to include it now,” Froelich said by phone. “Should it be an issue, it’s going to be opposed.”

Dairy is nonetheless a perennial target in trade talks and was among the final issues to be nailed down in the Trans Pacific Partnership, from which Trump withdrew the U.S. after taking office. Trudeau’s predecessor announced C$4.3 billion ($3.5 billion) in funding for Canadian farmers to cushion the impact of concessions made in the deal to partially open the country’s dairy market.

With Canada’s negotiating team waiting to see what the U.S. wants on dairy, MacNaughton -- recounting his conversation with Ross -- isn’t taking anything for granted. “The best laid plans sometimes go awry,” the ambassador said.

G-7

Innovation, Science and Economic Development Canada. September 25, 2017. Canada to highlight commitment to innovation at G7 Industry and ICT Ministers’ Meeting. Minister Bains to promote jobs, skills and business opportunities at G7 talks in Italy

Ottawa – The Government of Canada is committed to working with G7 countries to strengthen economic and political partnerships and create more growth, jobs, skills and business opportunities for Canadians and the citizens of all G7 countries.

The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, will participate in the meeting of G7 ministers of industry and information and communications technologies (ICT) in Turin, Italy, on September 25 and 26, 2017. Minister Bains will highlight the Government of Canada’s Innovation and Skills Plan, a multi-year strategy aimed at ensuring that Canada meets the challenges and seizes the opportunities of the modern and global economy. By supporting innovation and life-long learning, our government can play a key role in fostering the birth and growth of industries that never existed before and of new companies that will be globally competitive. As these companies grow, they will create more middle-class jobs for Canadians and more opportunities for the next generations.

While in Italy, the Minister will also advocate for Canada’s values of diversity and inclusion. Through the Innovation and Skills Plan, our government is working tirelessly to promote Canada as an ideal investment destination for global businesses and to foster the scaling up of our own companies in the global economy.

Canada’s values of openness, diversity and inclusion are a big part of that plan. Our open society has attracted generations of innovators and entrepreneurs who have found in Canada a place to fulfill their potential. Canada benefits from the talent and hard work of newcomers, who contribute by creating jobs, opportunity and prosperity for Canadians. We are a stronger country as a result. Diversity is our strength, and we are committed to playing a leadership role to promote it on the world stage.

In 2018, Canada will chair the G7, providing an opportunity to showcase efforts to strengthen the middle class, advance gender equity, fight climate change and promote diversity and inclusion.

During his visit to northern Italy, the country’s industrial heartland, Minister Bains also plans to meet with Italian business representatives from various industries, with a particular focus on the automotive sector, to promote Canada as a rewarding place to invest.

Quotes

“Our government is deepening its global economic relationships to develop new markets and opportunities for Canadian businesses and to create more jobs for middle-class Canadians. Our values of diversity, openness and inclusion give Canadians a competitive edge in a global economy that depends on people’s ability to navigate through different cultures and languages, and I’m proud to promote these values at home and abroad. I look forward to collaborating with my G7 counterparts and continuing to explore how we can grow our economies and strengthen our partnerships.”

– The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development

Quick Facts

• The Group of Seven (G7) comprises seven of the world’s advanced economies: Canada, France, Germany, Italy, Japan, the United Kingdom and the United States.
• The G7 dates back to the mid-1970s. The G7 presidency, which rotates annually between member countries, sets the agenda for the year in consultation with G7 partners. Italy holds the presidency in 2017, and Canada will hold it in 2018.

AVIATION

BOMBARDIER. The Globe and Mail. SEPTEMBER 25, 2017. TRANSPORTATION. Bombardier's pivotal week: Five things you need to know
MATT LUNDY

Bombardier Inc. is facing threats on two fronts in what could be a big week for the Montreal-based plane and train maker. Here are five things you need to know.

U.S. decision

The next chapter of Bombardier's spat with Boeing Co. is expected Tuesday. The U.S. Commerce Department will soon issue a preliminary ruling on whether Bombardier benefited from unfair subsidies related to the sale of its C Series aircraft in the U.S. market. Boeing contends Bombardier sold its C Series planes to Delta Air Lines Inc. at "absurdly low prices" while benefiting from unfair government aid. Bombardier has received provincial and federal subsidies to help shore up its C Series program – most recently, a $372.5-million pledge of federal aid that also supports its Global 7000 business jet program. The U.S. government is "widely expected to back Boeing's claim," Credit Suisse analysts said Monday in a report. If so, Delta would be forced to pay duties on the C Series jets it receives.

The fallout

The trade spat will not end with Tuesday's expected ruling. If the decision goes against the Quebec-based company, "Bombardier, along with Canada, Delta Air Lines, and other carriers, would likely appeal the case to the U.S. Court of International Trade," Credit Suisse analysts said in their report. Bombardier has a prominent backer in Canadian Prime Minister Justin Trudeau. Last week, Mr. Trudeau urged Canadian firms to direct pressure at Chicago-based Boeing over its trade complaint. "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," he said at a news conference. Boeing's actions may also threaten the potential sale of its fighter jets to the Canadian government.

Rail merger

This week could also bring repercussions for Bombardier's rail business. Germany's Siemens AG is expected to announce Tuesday a rail merger with France's Alstom SA, two sources tell Reuters. Siemens had been in negotiations for months with Bombardier, whose rail business is based in Berlin. A merger would be aimed at countering increased competition from China's CCRC Corp.

Bombardier shares

Bombardier stock is roughly unchanged this year, as of early Monday afternoon, but recently tumbled after news of the Siemens-Alstom talks. "Bottom line, we believe that BBD shares could be under pressure [Tuesday] depending on the outcome related to the countervailing duty and the rail merger," said Benoit Poirier, an analyst at Desjardins Securities, in a research note Monday. "We would view any share price weakness as a buying opportunity for long-term investors, as we continue to believe BBD shares have the potential to reach $5 per share by 2020 as management proceeds with its 2020 plan." Mr. Poirier has a "buy" rating on the company and share-price target of $3.25.

Investigation

Against the backdrop of these two decisions, Bombardier is beset by allegations of corruption. Sweden's National Anti-Corruption Unit has charged a Bombardier employee with "aggravated bribery" in connection with a $340-million (U.S.) contract to sell railway equipment in Azerbaijan. Five others at Bombardier Transportation Sweden are suspects in the investigation of the 2013 deal, Swedish prosecutors have said.

BOMBARDIER. The Globe and Mail. SEPTEMBER 26, 2017. 'Buckle up for some short-term turbulence' in Bombardier stock today
MICHAEL BABAD

• Bombardier awaits countervailing ruling …
• … and potential Siemens-Alstom tie-up
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Bombardier in focus

With two key decisions looming, Bombardier Inc. shareholders could be flying on a wing and a prayer today.

First, the U.S. Commerce Department is expected to issue its preliminary ruling in Boeing Co.'s demand for countervailing duties on the Canadian company's C Series planes. There would be a separate anti-dumping decision early next month, unless delayed, and a final ruling on countervailing by the U.S. International Trade Commission in early 2018.

Boeing wants a countervailing duty of 79.41 per cent, alleging that Bombardier struck a deal with Delta Air Lines for C Series aircraft for less than it should have because it was effectively subsidized by federal and provincial governments.

The actual amount of money isn't known.

"While we are likely to see the determination of a countervailing duty [today], we would note that this is a preliminary decision and we continue to believe that BBD is well-positioned to win this case," said Desjardins analyst Benoit Poirier, referring to Bombardier by its stock symbol.

His reasoning behind that is that "(1) Boeing did not even compete for Delta's order, as it does not make an aircraft of Delta's specified size, (2) the high proportion of U.S. content in the C Series (50 per cent), and (3) the significant number of jobs that rely on Bombardier and the C Series in the U.S."

Of course, you've got to keep the political winds in mind, given President Donald Trump's strident trade agenda.

Also in the wings is a potential decision by Siemens AG, which is in negotiations on a rail unit merger with France's Alstom SA, having talked to Bombardier about a similar deal. This also could be unveiled today, Mr. Poirier said in a research note sent Monday and titled "Preliminary duties expected tomorrow - buckle up for some short-term turbulence."

As our European correspondent Eric Reguly reports, the French government is backing that marriage.

Not only would Bombardier have to deal with rail industry giant CRRC Corp. from China, it would also face a much bigger European competitor if the Siemens and Alstom businesses merge.

"This merger would create a business with combined revenues of US$18-billion and could put Bombardier Transportation (BT) at a competitive disadvantage, in our view, given its smaller size (BT recorded revenues of US$7.6-billion in (2016)," Mr. Poirier said.

"Bottom line, we believe that BBD shares could be under pressure [today] depending on the outcome related to the countervailing duty and the rail merger," he added.

"We would view any share price weakness as a buying opportunity for long-term investors, as we continue to believe BBD shares have the potential to reach C$5 per share by 2020 as management proceeds with its 2020 plan."

Bombardier said its policy is to not comment on its stock.

BOMBARDIER. The Globe and Mail. SEPTEMBER 26, 2017. Bombardier under pressure as France backs looming Siemens, Alstom rail tie-up
ERIC REGULY, EUROPEAN BUREAU CHIEF

This file photo taken on April 6, 2017, shows the new Coradia Liner train of SNCF Intercites and train-building giant Alstom presented at the Gare de l'Est railway station in Paris. France's Alstom and Germany's Siemens have a merger deal ready to sign.

ERIC PIERMONT/AFP/GETTY IMAGES

ROME - The French government is throwing its weight behind a merger of the Siemens AG and Alstom SA train operations, a deal that would put enormous pressure on rival Bombardier Inc.

France controls 19.9 per cent of Alstom, and media reports Tuesday said the government has approved the deal, which could be unveiled in the next few hours.

The two train makers confirmed last week that they were in preliminary talks to combine their transportation divisions. If the merger goes ahead, the new company, likely to be called Siemens-Alstom, would be the world's second-largest train company, after China's CCRC.

The merger would significantly narrow the strategic options of Bombardier Transportation (BT), as Bombardier's rail division is called. Siemens and Bombardier had been in talks about combining their rail businesses.

BT, which is based in Berlin, declined to comment on Tuesday about the Siemens-Alstom deal and how it would affect the Canadian train maker.

BT insiders have said that competition from the new breed of Chinese train giants, which intend to become strong competitors in the European and North American markets, would force industry-wide consolidation among the French, German, Italian and Japanese train companies, a process that has already started. In 2015, Hitachi of Japan bought Italy's AnsaldoBreda, the maker of Italy's new generation of Bombardier-engineered high-speed trains.

It wasn't immediately clear why Siemens wanted to forge a deal with Alstom instead of BT, though Siemens and BT had significant overlap, raising the likelihood of asset sales and job cut that would not have pleased the French government or the workers' unions.

BT is 70 per cent owned by Bombardier and 30 per cent by the Caisse de dépôt et placement du Québec, which invested $1.5-billion (U.S.) into BT in 2015 as Bombardier was struggling to raise money to finance its slow-selling C Series jet, a competitor to the smaller jets made by Airbus and Boeing.

Siemens reportedly would own slightly more than 50 per cent of the enlarged rail company, various report said. Alstom intends to pay a special dividend to shareholders if the deal goes through. Alstom's boss, Henri-Poupart Lafarge, would be CEO of the new company.

The merged company would have annual sales of about €16-billion ($18.8-billion U.S.). Siemens is best known as the maker of Germany's ICE high-speed intercity trains while Alstom makes the high-speed TGV trains that are a source of great French pride. Siemens is also a strong player in signalling systems.

Bombardier also makes high-speed trains but is better known for its commuter and light-rail trains.

Alstom shares were down slightly in Paris trading. Siemens shares were flat. Both companies have seen substantial rises in their prices over the last year.

BOMBARDIER. The Globe and Mail. Bloomberg. 26 Sep 2017. Rail-equipment deal, trade dispute put Bombardier’s turnaround in jeopardy. The two-year turnaround plan made by chief executive Alain Bellemare, above, is in peril as a U.S. Commerce Department ruling could threaten the jewel of Bombardier’s commercial aircraft business.
FREDERIC TOMESCO

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 was filed 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 United States 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 A shares tumbled 6.3 per cent to $2.23 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 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 signalled it supports deeper corporate ties with Germany, suggesting a deal between Levallois-Perret, Francebased Alstom and Munich-based Siemens would have political backing.
Bloomberg News reported on 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 on Friday it was weighing “multiple options” for its rail business – repeating a
phrase Mr. 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 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 Mr. Bellemare’s plan, announced last October, which included 7,500 job cuts worldwide.
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.”
With the exception of a twoaircraft 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 favour of Bombardier at International Trade Commission hearings in May, saying that it never even considered Boeing models before placing its order with the Canadian plane maker.
The sales drought is likely to pressure Bombardier’s efforts to sell more planes outside the United States 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.”
Bombardier (BBD.B) Close: $2.14, down 9¢

BOMBARDIER. REUTERS. SEPTEMBER 26, 2017. Bombardier aims to close plane deals ahead of Canadian PM's China visit
Brenda Goh

SHANGHAI (Reuters) - Planemaker Bombardier aims to close deals with Chinese airlines in time for an expected trip by Canadian Prime Minister Justin Trudeau to China next month, a senior Bombardier executive said on Tuesday.

Marc Meloche, Bombardier Commercial Aircraft’s head of structured finance, told Reuters the planemaker was in talks with carriers, including China’s three largest airlines, and leasing businesses on purchasing its C-Series plane.

“Prime Minister Trudeau is coming to China next month so there is optimism that Bombardier will be among those able to announce deals on that trip,” he said.

“Bombardier is talking to all three big Chinese airlines, as well as many regional (players) and start-ups. All are very interested in the Bombardier C-Series.”

Bombardier is pushing hard for orders in China, the world’s fastest-growing aviation market, at a time when it faces threats to U.S. sales of the C-Series single-aisle jet because of a trade dispute with U.S. rival Boeing.

The U.S. government is on Tuesday expected to slap a preliminary anti-subsidy duty on sales of C-Series jets over that dispute.

The C-Series competes with some aircraft made by Brazil’s Embraer SA, as well as the smallest planes made by Boeing and Airbus.

Meloche also said that several Chinese lessors, many of which were looking at sale-and-leaseback opportunities, had issued term sheets in support of C-Series deliveries.

New rules requiring Chinese airline start-ups to operate at least 25 smaller-city hopper jets before graduating to bigger aircraft have also fueled hopes of Chinese demand for C-Series jets.

While current C-Series models accommodate 110 to 130 seats, above China’s 100-seat limit for regional jets, Meloche said Bombardier can make adjustments to meet the requirements.

He also said Bombardier could expand its activities at China’s Shenyang Aircraft Corporation, which already makes part of the fuselage for its C-series and Q-series aircraft.

But unlike Boeing and Airbus, which are expanding production facilities in China, he said Bombardier had not discussed the possibility of a separate aircraft plant in the country.

Reporting by Brenda Goh in SHANGHAI; Additional Reporting by Allison Lampert in MONTREAL and David Ljunggren in OTTAWA; Editing by Clarence Fernandez and David Goodman

BOMBARDIER. ALSTON. SIEMENS. SEPTEMBER 26, 2017. Alstom and Siemens rail deal stirs French political passions
Alexander Hübner, Cyril Altmeyer

MUNICH/PARIS (Reuters) - Siemens (SIEGn.DE) and Alstom (ALSO.PA) are expected to announce a deal merging their rail operations on Tuesday, a Franco-German industrial breakthrough for President Emmanuel Macron but a move already riling opposition politicians.

Macron’s centrist government has said it supports efforts to strengthen French industry through partnerships with German firms as long as jobs are safeguarded. The French state owns around 20 percent of Alstom.

Siemens is expected to announce the rail deal with Alstom on Tuesday rather than pursuing an alternative with Canada’s Bombardier (BBDb.TO), two sources familiar with the matter told Reuters.

The agreement is likely to see Siemens Mobility merged into Alstom, in which Siemens would hold 50 percent plus one share, while the chief executive would be Alstom’s current boss Henri-Poupart Lafarge.

Major train makers in Europe are under increasing pressure to combine their businesses as much-larger Chinese state-backed rival CRRC (601766.SS) embarks on a global expansion.

Siemens Chief Executive Joe Kaeser said he believed the scale of CRRC left little room for regulators to oppose a deal.

“It always depends, but the facts are that there is a dominant player,” he told Reuters in an interview in New York.

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.

Siemens stands to gain control of Alstom’s main business, since all of Alstom’s divisions deal with the railways and transportation industries.

A special dividend would even out the value of Siemens and Alstom, which has too much cash on its balance sheet, to smooth the intended 50-50 joint venture, one of the sources said.

“Will there be a special dividend? Yes,” said the second person.

Siemens’ mobility division reported operating profit of 678 million euros ($800 million) in its last financial year, a margin of 8.7 percent of sales and a 15 percent increase on the prior year.

Alstom posted adjusted EBIT (earnings before interest and tax) of 421 million euros in its most recent annual earnings, a margin of 5.8 percent and also a 15 percent rise.

SIGNS OF BACKLASH

While the French government has made comments backing the deal, several opposition politicians and French trade union activists expressed concerns.

Their worries center on France losing control of its TGV high-speed train – a symbol of national pride that has highlighted French engineering skill – and possible job losses.

French right-wing politician Nicolas Dupont-Aignan criticized the likely deal on Tuesday as being more favorable to Germany than France, as did far-right politician Nicolas Bay, the National Front’s secretary general, who said on Twitter that it could result in the “eradication of French industry”.

Eric Woerth, a member of the right-wing Republicans’ party, voiced similar views on his Twitter account.

“Is this now the end of Alstom? Will TGV become German? Why does the government accept such an imbalance?”

Last week, the French government’s spokesman said France was not worried about an Alstom-Siemens tie-up provided that jobs were protected. One source said France had no concerns over any anti-trust issues emanating from it.

A branch of the CFDT trade union representing Alstom workers wrote on Twitter: “Macron abandoned Alstom to GE and he’s now abandoning them to Siemens.” Macron served as economy minister for two years from August 2014.

A tie-up between the two companies - aimed at creating a European champion in the railway sector similar to Airbus (AIR.PA) in aviation - would represent a reconciliation of sorts between Siemens and Alstom.

Alstom 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, under a temporary agreement with construction group Bouygues (BOUY.PA).

Analysts at Exane BNP Paribas raised their rating on Alstom to “neutral” from “underweight” noting a deal offered better growth prospects than remaining a standalone company.

“We suggest that, if they participate, value creation would be limited for Siemens but material for Alstom,” the Exane BNP Paribas analysts wrote.

“Aside from the M&A (mergers and acquisition) angle, we believe that commercially, this year will be relatively muted for Alstom. With no large contracts in sight, pressure on free cash flow should intensify due to lack of downpayments received.”

Reporting by Alexander Huebner and Cyril Altmeyer; Additional reporting by Georgina Prodhan, Sudip Kar-Gupta, Maya Nikolaeva and Alwyn Scott; Editing by Keith Weir

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LGCJ.: