CANADA ECONOMICS

NAFTA

PM. October 11, 2017. Prime Minister concludes visit to Washington, D.C. Washington, D.C., United States of America

The Prime Minister, Justin Trudeau, today concluded his visit to Washington, D.C., and will now travel to Mexico City for his first official visit to Mexico.

While in Washington, Prime Minister Trudeau took part in a keynote conversation with Pattie Sellers at the 2017 Fortune Most Powerful Women Summit. He stressed the importance of gender equality and how women’s empowerment creates economic growth that benefits everyone.

The next day, the Prime Minister participated in a roundtable led by WomenOne to discuss solutions to the challenges women and girls face every day globally.

The Prime Minister then met with members of the U.S. House Committee on Ways and Means to discuss the vital trade and economic relationship between Canada and the United States.

Prime Minister Trudeau also met with United States President Donald J. Trump. The Prime Minister reiterated Canada’s commitment to modernize the North American Free Trade Agreement (NAFTA) for the benefit of all three partners – Canada, the U.S., and Mexico.

Quote

“There is no relationship in the world quite like the Canada-U.S. relationship. Canadians and Americans know that we are all better off when we work together to grow the middle class and create prosperity on both sides of the border. Canada will continue to work with the U.S. to modernize NAFTA so that people in Canada, the United States, and Mexico can benefit from good, well-paying jobs and increased opportunities to provide for their families.”

— Rt. Hon. Justin Trudeau, Prime Minister of Canada

Quick facts

• Canada and the United States share one of the largest trading relationships in the world. Bilateral trade between the two countries was valued at nearly $882 billion in 2016.
• Canada is the largest secure supplier of energy to the United States.
• The two countries share the longest, secure border in the world, over which approximately 400,000 people and more than $2 billion worth of goods and services cross daily.
• Canada is the number one export destination for most American states, and cross-border trade and investment support nearly nine million jobs in the United States.

The Globe and Mail. 12 Oct 2017. NAFTA negotiations teeter as Trump threatens to rip up pact. With talks now in fourth round, Trudeau acknowledges free-trade agreement could die
LAURA STONE
ADRIAN MORROW, WASHINGTON

President says he could strike bilateral agreement with Canada or Mexico
Chair of U.S. trade committee demands greater access to Canada’s dairy industry
U.S. President Donald Trump threatened to kill NAFTA in a face-to-face meeting with Justin Trudeau, saying “it will be fine” if the trade agreement died.
Hours later, Mr. Trudeau acknowledged for the first time that the 23-year-old trade deal between Canada, the United States and Mexico that has fuelled massive export growth could fall apart.
Mr. Trump raised the prospect on Wednesday of terminating the North American free-trade agreement as Mr. Trudeau sat directly beside him in the Oval Office – with the U.S. President also hinting he might pursue a separate deal with either Canada or Mexico if the talks implode.
“It’s possible we won’t be able to make a deal, and it’s possible that we will,” Mr. Trump told reporters gathered in the Oval Office, as Mr. Trudeau sat silently with his hands crossed.
“I think Justin understands this, if we can’t make a deal, it will be terminated, and that will be fine. They’re going to do well and we’re going to do well. But maybe that won’t be necessary. But it has to be fair to both countries.”
As the fourth round of trade talks gets under way in nearby Arlington, Va., Mr. Trudeau travelled to the White House on Wednesday to seek clarity from Mr. Trump, who has previously threatened to tear up the trade deal but also to simply tweak it. Instead, Mr. Trump was vague about his support for NAFTA, which he said he has opposed “for a long time.”
Although he insisted he still believes a deal can be done with the Trump administration, Mr. Trudeau said he realizes the U.S. President can make surprising decisions and might do so with NAFTA.
At a press conference later in the day, Mr. Trudeau continued to defend the need to modernize NAFTA. But he acknowledged the circumstances surrounding the renegotiations “are often challenging” and vowed to stand up for Canadian interests no matter what happens.
“We have to be ready for anything, and we are. We’re taking this very seriously,” Mr. Trudeau said, as he stood atop the Canadian embassy, overlooking the Capitol. “I think Canadians are aware that the American administration, and the President, makes decisions that surprise people from time to time. And that is certainly something that we are very much aware of, and very braced for, and conscious of,” he later said. “We know that there is a certain level of unpredictability these days.”
It was a sentiment echoed by former prime minister Stephen Harper, who told a Washington panel discussion on Wednesday that it is now “conceivable” that Mr. Trump could cancel the deal.
Still, Mr. Trudeau said he remained upbeat about the possibility of renegotiating the agreement because it benefits the North American economy. “My optimism towards NAFTA, towards a renegotiation, isn’t based on personality or reading political tea leaves,” he said. “My optimism is based on the fact that I know how good NAFTA has been for millions of citizens.”
In a rare moment of tough talk, Mr. Trudeau said he spoke with Mr. Trump about the U.S. Department of Commerce’s recent decisions to slap 300-per-cent duties on Canadian plane maker Bombardier for its C Series airliner after legal complaints from U.S. company Boeing.
“I highlighted to the President how we disagree vehemently with Commerce’s decision to bring in countervailing and anti-dumping duties against Bombardier, that we feel that this is not something that is warranted,” Mr. Trudeau said.
“I certainly mentioned that this was a block to us … making any military procurements from Boeing.”
In this round of NAFTA talks, the United States is expected to hit Canada and Mexico with tough demands on so-called rules of origin for autos, including a requirement that all cars and trucks made within the NAFTA zone contain at least 50 per cent U.S. content in order to be bought and sold tariff-free between the three countries.
U.S. negotiators are also set to take aim at Canada’s supply-management system, which fixes prices for milk, eggs and poultry. Time has also been blocked off for talks on trade remedies, which could include the Chapter 19 dispute-resolution panels Canada and Mexico are fighting to keep against U.S. attempts to scrap them.
Commerce Secretary Wilbur Ross said on Wednesday that talks had so far mostly focused on easier topics and will now shift to tackling harder matters. He also said the new NAFTA will have 28 chapters.
Mr. Ross vowed that the United States will win tougher rules of origin.
“I think that you will find we will get increased percentages in the rules of origin and I think you’ll find the car companies will adapt themselves to it,” he said at an event with former Canadian industry minister James Moore at Dentons law firm offices in Washington.
Mr. Ross acknowledged the apoplexy among U.S. industry over the White House’s economic nationalism and said Canada was “trying to stir up trade groups in the U.S. to have the U.S. go easy in the negotiations.”
“The agriculture community is worried, the multinational community is worried, because they’re the ones that have things potentially at risk,” he said.
Earlier on Wednesday, the Republican chairman of a powerful trade committee on Capitol Hill told Mr. Trudeau that he wants NAFTA talks to succeed, but the United States should get more access to Canada’s dairy industry.
Kevin Brady, a Republican congressman from Texas, told Mr. Trudeau before a meeting with the U.S. House committee on ways and means that Canada and the United States have to make progress on a variety of issues, including dairy. The bipartisan committee has jurisdiction over all taxation and tariffs and is responsible for implementing any changes to NAFTA.
“Our committee, who you are with today, has constitutional responsibility for trade. It’s dedicated to ensuring these negotiations are successful,” Mr. Brady told Mr. Trudeau during brief remarks before a private meeting with the Prime Minister.
“To do that, we need to make progress on issues such as customs barriers, border, intellectual-property protection and greater market access for U.S. dairy producers.”
A spokeswoman for Canada’s dairy industry said the country has a significant trade deficit with the United States on dairy, and the group expects the government to fight for supply management in the NAFTA talks.
“Canada’s Prime Minister and his cabinet have clearly expressed their support and willingness to defend the dairy industry and supply management, and dairy representatives will attend every round of the renegotiations of NAFTA to ensure that their actions continue to match their words,” Dairy Farmers of Canada spokeswoman Isabelle Bouchard said in a statement.

The Globe and Mail. 12 Oct 2017. Campbell Clark on Trudeau’s unflappable poker face. While Mexico’s Foreign Minister talks tough about his country’s treatment in NAFTA talks, Trudeau’s tone verges on Pollyanna
CAMPBELL CLARK, Columnist

‘Mr. President, is NAFTA dead?”
“We’ll see what happens.” That was President Donald Trump, sitting next to Justin Trudeau in the Oval Office, casually musing that North America’s continental trade agreement might be scrapped.
The Prime Minister did well, over the next six minutes of a photo op-turned Trump media conference, to sit there with hands clasped on his lap, without betraying much reaction, as Mr. Trump said several times that he might kill NAFTA. Or he might not.
Sure, Mr. Trudeau coughed, discreetly, when a Canadian reporter asked Mr. Trump about the last time the PM had visited the White House, when the President had said that in Canada’s case, NAFTA only needed a little tweaking. (What changed?) Mr. Trudeau’s eyes tightened once or twice. But at no point did the PM slap his forehead or do a slapstick spit-take.
That must have been hard. He kept a poker face, with a little listening smile. He was the friendly Canadian, talking about the close interrelationship of the two countries.
The Mexicans aren’t quite as positive these days. As Mr. Trump’s negotiators put forward hardball positions in talks, they’ve become combative. Mexican Foreign Minister Luis Videgaray said this week that the end of NAFTA will hurt U.S. exporters more than Mexican ones, and that breaking the trade deal would mean a breaking point in Mexico-U.S. relations – suggesting it would hurt co-operation on things like immigration and drug enforcement. The Mexicans are pushing back with elbows.
But Mr. Trudeau remained unflappable, and unflaggingly positive.
In the Oval Office, Mr. Trump meandered around the trade agreement that matters so much to his visitor, saying he might pull out of NAFTA and then strike a bilateral trade deal with Canada, but not Mexico, or maybe even the other way round. He said Mr. Trudeau was his friend, and later flippantly suggested NAFTA might not work out, but no biggie. “I think Justin understands this, if we can’t make a deal, it will be terminated, and that will be fine,” Mr. Trump said.
Mr. Trudeau doesn’t think that’s fine. But you didn’t hear that from him. At his own news conference on the roof of the Canadian embassy, Mr. Trudeau stressed a deal can still be done, but eventually acknowledged his government is braced in case Mr. Trump does pull the pin on NAFTA. Canadians, he said with a little smile, know the President makes decisions “that can surprise people.”
There’s room to wonder how much being Mr. Trump’s friend matters in the end. The two leaders’ February meeting ended with Mr. Trump’s comment about tweaking NAFTA, but he may have forgotten it before Mr. Trudeau’s limo was out of the driveway. The Mexicans feel it’s time to deliver warnings.
Yet Mr. Trudeau’s relentless optimism is both his preferred style and a strategy. The government-wide plan was to try to stay away from angry, tweeting Trump. Who can deny the President escalates conflicts when he feels challenged? And the nice Canadian approach is one the government has mustered in lobbying others who might influence the outcome – in Congress, state capitals and chambers of commerce across the United States.
When he went to speak to members of the powerful House ways and means committee on Wednesday, Mr. Trudeau opened with honey, not vinegar, repeating the talking point that Canada is the U.S.’s largest customer, that U.S. companies sell billions of dollars of goods in Canada – and saying he wants to make that easier. Members of that key committee are the kind of allies Mr. Trudeau needs if the President does move to withdraw from NAFTA – Congress has constitutional jurisdiction over trade, and it has the most power to rein in a presidential move to end NAFTA.
Canada is not Mexico, either. Those testy warnings of Mr. Videgaray gave voice to resentment in the Mexican body politic when he said his country is bigger than NAFTA and Mexico has to be prepared to walk away from a bad deal, in part for its own “dignity.”
At times, Mr. Trudeau’s friendly Canadian verged on Pollyanna, at least until he acknowledged that he has to be ready for NAFTA’s breakdown. But most Canadians seem to accept he’s playing a patient hand in these talks. Still, at some point, they might itch to hear their Prime Minister say Canada’s bigger than NAFTA, too.

THE GLOBE AND MAIL. OCTOBER 12, 2017. What's on Trudeau's agenda in Mexico, and what's at stake for NAFTA? A guide. After visiting Washington, Trudeau's goodwill tour to save NAFTA continues with his first-ever official visit to Mexico. Here's what to expect
RYAN REMIORZ, THE CANADIAN PRESS

The basics

• Prime Minister Justin Trudeau is headed to Mexico on Thursday as the North American free-trade agreement’s future hangs in the balance.
• Mr. Trudeau’s first official visit to the NAFTA country includes a meeting with President Enrique Pena Nieto, a gala dinner and a tour of Mexico’s recovery efforts after two major earthquakes last month. Here’s the official itinerary.
• Mr. Pena Nieto lauded Canada’s friendship with Mexico and the economic benefits of NAFTA in an opinion piece for The Globe and Mail on Thursday. “I am convinced that this vital junction for Canada-Mexico relations will translate into more and better opportunities for our countries,” Mr. Pena Nieto wrote.
• Mr. Trudeau goes to Mexico City from Washington, where, after a meeting with U.S. President Donald Trump, the Prime Minister acknowledged for the first time that the 23-year-old trilateral NAFTA deal could fall apart. Here’s a full primer on what Mr. Trudeau said and did in the U.S. capital.
• Meeting Mr. Trudeau at the White House, Mr. Trump was ambivalent about whether a deal could be reached, and again threatened to let NAFTA die. He also hinted that he might pursue bilateral deals with either Mexico or Canada.
• The fourth round of NAFTA talks is under way in Arlington, Va., until next Tuesday. Here’s a primer on the issues behind the talks and what the countries are asking for.

Itinerary in Mexico

• Thursday afternoon: Mr. Trudeau and his wife, Sophie Grégoire Trudeau, arrive in Mexico City at 12 p.m. local time (1 p.m. ET). After a wreath-laying ceremony and a tour of the Mexican Red Cross, Mr. Trudeau holds a roundtable with civil-society leaders along with his Foreign Affairs Minister, Chrystia Freeland, and International Trade Minister Francois-Philippe Champagne.
• Thursday night: Mr. Trudeau and his ministers then visit Mexico's President Enrique Pena Nieto for an extended bilateral meeting. Later, Mr. Pena Nieto will play host to the Trudeaus at an official dinner.
• Friday: Mr. Trudeau speaks before the Mexican Senate, where he's expected to signal that Canada considers Mexico one of its top partners and wants to continue to work together on a number of fronts.

REUTERS. OCTOBER 12, 2017. Ending NAFTA could cost U.S. up to 50,000 auto parts jobs: study
David Lawder

WASHINGTON (Reuters) - The U.S. auto parts industry could lose up to 50,000 jobs if the North American Free Trade Agreement is terminated and companies must pay higher tariffs to ship products to Mexico and Canada, according to a new study set for release on Thursday.

A worker moves a ramp on a car carrier trailer outside City Toyota in Daly City, California, U.S., October 3, 2017. REUTERS/Stephen Lam
U.S., Canadian and Mexican negotiators are meeting in Arlington, Virginia, this week for a fourth round to try to revise the 23-year-old agreement, which allows the tariff-free flow of vehicles and parts across the three borders.

U.S. President Donald Trump has criticized NAFTA for luring U.S. manufacturing jobs to low-wage Mexico and has vowed to quit the pact or revise it to reduce his country’s $64 billion trade deficit with its southern neighbor.

Ending NAFTA, however, would result in a full reversion to tariffs under World Trade Organization rules, according to the Boston Consulting Group study sponsored by the Motor Equipment Manufacturers Association. The U.S. auto parts industry employs about 870,000 workers.

Mexico and Canada would fare better because they previously charged higher tariffs than the United States and would revert to those levels. And with no trade incentive to manufacture in the United States other than to avoid the 25 percent truck tariff, more full vehicle production would migrate to low-cost countries such as China, auto experts say.

Job losses could be as much as 24,000 if renegotiations lead to requirements for content from North American and specifically the United States, according to the study.

NAFTA negotiators face tough new U.S. demands to increase regional content for autos to 85 percent from 62.5 percent, with 50 percent from the United States, according to people briefed on the plan.

The rules of origin demands are among several conditions that the U.S. Chamber of Commerce has labeled “poison pill proposals” that threaten to torpedo the talks.

The auto parts study was conducted before these targets were revealed.

Raising the automotive content thresholds and forcing automakers to verify the North American origin of more electronics and other parts now sourced from Asia would cause some parts manufacturers to forego NAFTA benefits, said Ann Wilson, the association’s head of government affairs.

Instead, companies may ship in more products from low-cost countries outside the region, paying U.S. tariffs ranging from 2.5 to 5.0 percent.

“Instead of encouraging more U.S. content, these provisions will lead to less U.S. content,” Wilson said.

Reporting by David Lawder; Editing by Lisa Von Ahn

BLOOMBERG. October 12, 2017. U.S. Offers Proposal That Could Kill Nafta in 5 Years
By Eric Martin , Josh Wingrove and Andrew Mayeda

• ‘Sunset clause’ requires nations to decide to maintain accord
• Canada, Mexico say measure would create business uncertainty

U.S. negotiators on Wednesday presented a proposal for a so-called “sunset clause” that would see the North American Free Trade Agreement expire after five years unless the parties can agree to extend it, according to two people familiar with the talks.

The proposal was presented to a small group of negotiators, according to the people, who asked not to be identified discussing private negotiations. The White House declined to comment on the Nafta talks, and the U.S. Trade Representative’s press office didn’t immediately respond to a request for comment.

Canada and Mexico rejected the idea of a sunset clause after Commerce Secretary Wilbur Ross floated the proposal last month, saying it would create so much uncertainty for businesses that it could hurt long-term investment. The idea of a sunset clause has been among the most contentious proposals for a pact that already has a relatively straight-forward exit provision -- a country can leave after giving six-months’ notice of withdrawal.

U.S. President Donald Trump has repeatedly threatened to exit the pact if he can’t get more favorable terms. Negotiators began the fourth round of discussions to rework Nafta on Wednesday outside Washington.

Mexico’s ambassador in Washington Geronimo Gutierrez has said a termination clause would erode business confidence in the region, while his Canadian counterpart has said the Trump administration probably wouldn’t find much domestic support for the proposal.

“If every marriage had a five-year sunset clause on it, I think our divorce rate would be a heck of a lot higher,” Canada’s ambassador to Washington David MacNaughton said last month. “We can have that discussion, but I really do think it won’t be Mexico and Canada that are pushing back against the secretary, it will be a lot of Americans.”

The U.S. Chamber of Commerce has warned against so-called “poison pill” proposals by the U.S., including the sunset clause. Those “could doom the entire deal,” Thomas Donohue, the Chamber’s chief executive officer said Tuesday.

Asked about the sunset clause Wednesday at an event in Washington, Ross said “Yes, that’s our proposal.”

BLOOMBERG. October 12, 2017. Auto Industry Sees Threat to Jobs and Profits From Trump's Nafta Push
By Ryan Beene

• Parts supplier warn of risks inherent in trade pact overhaul
• Negotiators tackling auto rules in Nafta talks this week

The Trump administration’s push to change the automobile rules in the North America Free Trade Agreement will lead to higher costs on manufacturers and could put jobs at risk, according to research sponsored by an auto supplier trade association.

The administration is set to seek an increase in the amount of a vehicle’s components that must come from within the region to quality for duty-free status under the pact.

But changing the so-called rules of origin would increase manufacturing costs and expose carmakers to new tariffs, leading to higher vehicle prices and lower demand for costly technology and safety features, according to research prepared for the Motor and Equipment Manufacturers Association, the auto suppliers trade group.

"Up to 24,000 jobs could be impacted, could be lost actually, if we start increasing the cost of products," Xavier Mosquet, a senior partner at the Boston Consulting Group, said at a conference for the group, citing an analysis he prepared for it.

The warnings come amid a growing chorus of automotive executives and industry groups warning that the Trump administration’s hard-line stance in talks to renegotiate Nafta could lead to negative consequences for the sector.

Charles Uthus, vice president for international policy at the American Automotive Policy Council, told the conference that Nafta has created some $10 billion in annual savings for the auto industry in North America since it took effect. Eliminating those efficiencies would amount to "essentially a $10 billion tax on the auto industry in North America," he said.

After repeating threats to exit the accord, Trump on Wednesday wouldn’t say how he was leaning on a Nafta deal as he met with with Canadian Prime Minister Justin Trudeau at the White House. Negotiators from Canada, Mexico and the U.S. began the fourth round of talks to revamp the trade pact on Wednesday outside of Washington.

Auto industry lobbyists and executives are paying close attention to U.S. proposals on the rules of origin for vehicles. Those rules will be a major focal point in the current round of talks. Commerce Secretary Wilbur Ross said this week the U.S. will propose a hike to rules of origin percentage, and regional procurement rules and "you’ll find that the car companies will adapt.”

Auto executives and groups have warned such changes will upset a thriving North American auto industry by burdening the complex supply chain erected around Nafta with added costs and complexity.

The Globe and Mail. 12 Oct 2017. ARTICLE. Let’s keep our Mexico-Canada relationship strong
President of Mexico ENRIQUE PENA NIETO

Canada and Mexico are going through one of the best moments of our relationship. The ties that link us, as well as the values and principles we share, make it stronger every day. This year, we celebrate 73 years of diplomatic relations, and we are witnessing a historical moment characterized by both countries’ political willingness to further strengthen our ties and deepen our strategic dialogue under a renewed perspective. The current regional context demands a revitalization of the co-operation that already exists between our countries.
Prime Minister Justin Trudeau’s first visit to Mexico on Oct. 12-13 confirms the close friendship between our people and governments. Over the past years, we have undertaken three main efforts to consolidate our bilateral relationship: Capitalize and continue strengthening our shared values and institutionalized cooperation mechanisms; achieve a more articulated mobility between our societies; and increase bilateral trade.
Firstly, since Prime Minister Trudeau’s election, I have shared with him my commitment to the promotion of common values, such as democracy, free trade, human rights, gender equality and environmental protection.
The bilateral relationship between Mexico and Canada rests upon mechanisms to deepen our dialogue at the highest level. Last year, in October, we celebrated the first meeting of the High-Level Strategic Dialogue, which guides our efforts to implement a common agenda. We have also reinforced co-operation regarding the economic empowerment of women in both countries.
So far, we have supported each other in the most pressing times. After the fires that ravaged British Columbia, 360 Mexican wildfire technicians and firefighters were sent there, while Canada provided aid in the aftermath of the recent earthquakes in Mexico, for which we are grateful.
Second, as we have grown closer economically, our cultural and social ties have also intensified. More than 96,000 people of Mexican origin live in Canada, and more than 60,000 Canadians live in Mexico, contributing to the economy, society and culture of both countries.
Mexico and Canada celebrate the positive results of last December’s visa removal for Mexican visitors. The number of Mexicans travelling to Canada has increased significantly. In 2016, more than 250,000 Mexicans visited Canada; in just the first seven months of 2017, this number is already more than 228,000, with record levels in July.
Another example of increased bilateral mobility is the Seasonal Agricultural Workers Program. Since it began in 1974, it has become a symbol of our bilateral relationship and a model for international co-operation to maintain orderly, legal and safe migratory flows between our countries. Last year, close to 24,000 Mexican workers participated in the program.
Regarding academic exchanges, Mexico is committed to continuing investing more in education, innovation, and research to foster competitiveness and prosperity in North America. Through the Bilateral Forum on Higher Education, Innovation and Research with Canada (FOBESIIC) and Proyecta 10,000, Mexico’s Ministry of Education granted 460 scholarships for students to take a four-week intensive Englishlanguage course in Canada.
Third, our governments support the promotion of shared prosperity and increased regional competitiveness. Through the North American free-trade agreement, our region has become increasingly integrated and more competitive. Today, the social, economic and commercial ties within the region are stronger than ever.
After more than 20 years, both countries have enjoyed significant economic and social gains from NAFTA. Mexican imports from Canada increased from $1.2billion to $9.6-billion between 1993 and 2016. Furthermore, Canada is our fourth trade partner and the fourth source of foreign direct investment in our country.
The government of Mexico will keep working constructively with Canada to further strengthen our relations, achieve mutual benefits and contribute to reaching our shared goal: to make North America the most prosperous and competitive region in the world.
I am confident that the continuing dialogue with Prime Minister Trudeau will undoubtedly enhance our collaboration with the Canadian government to advance our shared objectives, while ensuring that our bilateral relationship continues to be at its best, with a broader agenda than ever. I am convinced that this vital junction for Canada-Mexico relations will translate into more and better opportunities for our countries.
Finally, on behalf of the Mexican people, I extend our warmest and most sincere congratulations for the 150th anniversary of Canada’s Confederation.

BLOOMBERG. October 12, 2017. Trudeau Grapples With Trump’s Mixed Messages on Nafta’s Fate
By Josh Wingrove

• Ross doubles down on ‘poison pills’ as Gingrich urges calm
• Trudeau to visit Mexico City as talks continue in Washington

VIDEO: https://www.bloomberg.com/politics/videos/2017-10-11/trump-denies-calling-for-more-nukes-blasts-nbc-video

BOMBARDIER

The Globe and Mail. 12 Oct 2017. Delta to follow through with order for 75 C Series jets
NICOLAS VAN PRAET

Delta Air Lines Inc. is moving ahead with an order for 75 Bombardier Inc. C Series airliners despite U.S. government duties of nearly 300 per cent, providing crucial backing to the Canadian plane maker as it fights off a trade challenge by rival Boeing Co.
Atlanta-based Delta, Bombardier’s biggest C Series customer, said on Wednesday it will take delivery of the aircraft but that it won’t pay the two duties imposed by the U.S. Department of Commerce in preliminary rulings in September and October. The carrier said it could postpone delivery of the planes.
“We are not going to pay a tariff and we do expect to still take the airplane,” Delta chief executive Ed Bastian told analysts and investors on a call to discuss third-quarter results.
“I can’t tell you how it’s going to eventually work out. There may be a delay in us taking the aircraft as we work through the issues with Bombardier, who’s being a great partner in this. We think that the aircraft needs to come to market. We believe it will come to market and we believe that Delta will get it at the agreed contractual price.”
The comments helped calm Bombardier investors fretting about Delta’s intentions as the manufacturer’s shares gained 4 per cent in Wednesday afternoon trading. But they raise questions about how Delta will get the aircraft and how things will play out in the event the U.S. International Trade Commission (ITC) upholds Commerce’s preliminary rulings.
“Nobody, and I mean nobody, has the bandwidth or the inclination to pay these duties,” said Richard Aboulafia, an airline analyst with the Teal Group. He estimated the penalties on Delta’s C Series purchase alone at $4.5billion (U.S.).
Delta struck a deal with Bombardier last year to buy 75 CS100 models at list price of $5.6-billion before an undisclosed discount typical in the industry for such large purchases. For Bombardier, the order was a key one that cemented the aircraft’s viability after a two-year delay to market and significant cost overruns. Quebec helped secure the deal by providing Bombardier with a $1-billion investment lifeline that shored up its cash position.
Boeing sued Bombardier earlier this year, alleging the Canadian plane maker benefited from unfair government subsidies to sell the C Series to Delta at “absurdly low” prices and asking for duties on the airliner to level the playing field. Bombardier counters that its government investments meet international trade rules.
Delta is scheduled to take delivery of the first C Series in spring, 2018, and to put the aircraft into service shortly after. Analysts say the plane, which offers passengers a roomier cabin than regional jets, should help Delta serve mid-size cities at an attractive operating cost.
The ITC is expected to deliver final rulings on whether Commerce’s initial decisions to impose duties will stand by the end of February, 2018. Boeing will have to prove it was harmed by the C Series sale to Delta for the ITC to rule in its favour. That’s a high bar for Boeing to meet, given it did not compete in the Delta sales campaign with its own aircraft, Mr. Bastian said.
“It is very difficult for Boeing or any U.S. manufacturer to claim harm with a product that we purchased that they did not offer and they don’t produce,” Mr. Bastian said. “As you look through this and try to see how exactly a ‘harm case’ is going to be developed, particularly to justify the type of tariffs that are being contemplated, to us it’s unrealistic, a bit nonsensical.”
The lawsuit has fuelled trade tensions between Canada and the United States, emerging as a flashpoint as the two countries try to hammer out a new continental trade pact.
Canada has called on Boeing to drop its complaint and has threatened to scrap plans to buy new fighter jets made by the plane maker. The United States has vowed to uphold its laws. Britain, home to a major Bombardier factory working on C Series wings, has also warned it would retaliate against Boeing if the manufacturer doesn’t abandon its complaint.
Boeing this week launched a multimedia campaign in Canada to try to boost public understanding of its footprint in the country. The goal is to reframe its reputation as a positive contributor to the economy, instead of the unprincipled bully it is being cast as by politicians in Quebec and Ottawa.
Delta Air Lines (DAL) Close: $53.07 (U.S.), up 37¢ Bombardier (BBD.B) Close: $2.35, up 10¢

The Globe and Mail. 12 Oct 2017. Bombardier employee acquitted of bribery
MARK MacKINNON, STOCKHOLM

A Swedish court has found Bombardier employee Evgeny Pavlov not guilty of “aggravated bribery” over his role in helping the Montreal-based transportation giant win a $340-million (U.S.) contract in Azerbaijan.
“The prosecutors have not proved that the charged person has promised or offered an inappropriate benefit,” Stockholm’s district court said in a judgment handed down on Wednesday.
“The prosecution against Evgeny Pavlov, as far as [proving he was] perpetrator of the bribe or aiding that crime, cannot be upheld,” the Stockholm court said.
Mr. Pavlov, who was facing up to six years in prison, is now free after spending six months in detention.
The ruling was focused narrowly on Mr. Pavlov’s role in the founding of Trans-Signal-Rabita, Bombardier’s local partner in a consortium that won a 2013 bid to install sophisticated train signalling equipment along the main east-west rail line in the former Soviet republic of Azerbaijan. It did not directly address other questions, including whether any bribe was paid to Bombardier’s Russian partners on the project. Still, the verdict was a relief to executives at Bombardier, a company besieged on several fronts, including the imposition by the U.S. government of duties of nearly 300 per cent on imports of its C Series airliners after a trade complaint by Boeing Co.
“We will review the ruling, but of course we are pleased with the outcome,” the company said in a statement e-mailed to The Globe and Mail. “Bombardier had always denied any allegation of criminal wrongdoing, and we are happy to see the court’s conclusions in this regard.”
During the trial, defence lawyers argued that Mr. Pavlov – who testified that he was given the Azerbaijan assignment partly because he, as a Russian citizen, didn’t need a visa to travel to the oil-rich republic, while his Swedish colleagues did – was too junior an employee to have participated in the complex bribery scheme alleged by the prosecution.
The court appeared to accept that argument. Its 75-page ruling made almost no mention of a central prosecution allegation that a Russian-controlled subcontractor, Multiserv Overseas Ltd., appeared to make an $84million profit within the deal.
The National Anti-Corruption Unit is continuing its investigation into five other employees of Bombardier Transportation Sweden who were named in the evidence presented against Mr. Pavlov.
The World Bank, which funded 85 per cent of the Azerbaijan project, is carrying out a separate audit of how the contract was awarded.

INTERNATIONAL TRADE

StatCan. 2017-10-12. Canada's international trade in services, 2016

Canada's deficit on international transactions in services narrowed by $2.3 billion to $23.3 billion in 2016, mainly reflecting a lower travel services deficit. Moderating this change was a fourth consecutive annual reduction in Canada's commercial services surplus.

On a geographical basis, the deficit with non-US countries was reduced by $2.0 billion in 2016 to $9.8 billion. The deficit with the United States narrowed for a third consecutive year, down by $0.3 billion to $13.5 billion.

This marked the first reduction in the deficit since 2011. The services deficit had been generally growing since the mid-2000s, mainly due to an expanding travel deficit.

Chart 1: Services balances

Lower travel deficit leads the changes in the services balance

The international travel deficit fell $3.2 billion to $14.2 billion in 2016, the lowest level in seven years. The deficit with the United States narrowed by $1.8 billion, as Canadians reduced their expenses and US residents increased their spending in Canada. In addition, the deficit with non-US countries was down by $1.4 billion as spending by non-US travellers visiting Canada increased by more than those made by Canadians on their overseas trips.

The surplus in commercial services was down by $1.3 billion in 2016 to $1.0 billion, as growth in payments outpaced that of receipts. Imports of commercial services were up by $3.0 billion, led by stronger payments in the financial services category. Exports rose by $1.7 billion, with larger receipts also recorded in financial services.

Securities trading, and the corresponding commissions generated from these transactions, has been a major source behind the decline in the commercial services surplus over the previous four years. Canadian firms have been actively raising funds in international credit markets during this period, contributing to the significant increase in payments of commissions to foreign firms facilitating this activity.

The transportation services deficit edged down by $0.3 billion to $10.5 billion in 2016. Receipts rose by $0.5 billion, with most of the gains in air transportation and, to a lesser extent, land transportation. Payments edged up $0.2 billion, mainly as a result of higher spending on land transportation.

Services deficit down with non-US countries

On a geographical basis, the overall deficit with non-US countries was reduced by $2.0 billion. The deficit with Europe decreased by $0.5 billion to $5.7 billion, led by a lower deficit with the United Kingdom. Meanwhile, the deficit with Asian countries was reduced by $0.9 billion to $3.0 billion, mainly from an improved balance with China.

The deficit on international transactions in services with the United States narrowed by $0.3 billion to $13.5 billion in 2016, a third consecutive reduction. This change mainly reflected a lower travel deficit and, to a lesser extent, a lower deficit in transportation services. This reduction was moderated by a deficit in commercial services, the first with the United States since 2010.

Canada's imports of services have historically exceeded exports of services, with persistent deficit positions vis-à-vis the United States, Mexico, Antilles and Europe.

Chart 2: Services balances by region

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/171012/dq171012c-eng.pdf

JOB VACANCIES

StatCan. 2017-10-12. Job vacancies, second quarter 2017

The number of job vacancies totalled 460,000 in the second quarter, up 67,000 (+17.2%) from the second quarter of 2016. The overall job vacancy rate rose 0.4 percentage points to 2.9%. Increases in job vacancies were broadly based across provinces and industrial sectors.

This was the third consecutive quarter with year-over-year increases in both the number of job vacancies and the job vacancy rate.

The job vacancy rate refers to the share of jobs that are unfilled out of all available payroll jobs. It represents the number of job vacancies expressed as a percentage of labour demand; that is, the sum of all occupied and vacant jobs.

Chart 1   Chart 1: Year-over-year change in the number of job vacancies

Year-over-year change in the number of job vacancies

The number of job vacancies that were for full-time work rose by 54,000, while job vacancies for part-time work were up by 14,000 on a year-over-year basis. Nationally, the average offered hourly wage was little changed at $19.50.

A number of labour market indicators point to improved labour market conditions during this time. According to the Labour Force Survey, national employment has increased at a relatively faster pace since the second half of 2016 and the unemployment rate has continued to trend downwards.

Compared with the first quarter of 2017, the number of job vacancies (unadjusted for seasonality) in Canada increased 18.8%, while the job vacancy rate rose 0.4 percentage points. These quarter-to-quarter increases may partly reflect seasonal recruitment patterns, as job vacancies were also up notably between the first and second quarters of both 2015 and 2016.

Infographic 1: Change in the number of job vacancies between the second quarter of 2016 and the second quarter of 2017, and between the first quarter of 2017 and the second quarter of 2017

Job vacancies and job vacancy rates rise in most regions of the country

Compared with one year earlier, the number of job vacancies in the second quarter rose in every province except Newfoundland and Labrador, where they were little changed. Ontario, Quebec and British Columbia posted the largest year-over-year increases in the number of job vacancies. Vacancies also rose in the Northwest Territories and Yukon, and were little changed in Nunavut. A similar pattern of increases across provinces and territories was observed for the job vacancy rate.

Chart 2: Change in the number of job vacancies between the second quarter of 2016 and the second quarter of 2017, by province and territory

Ontario had 20,000 (+12.0%) more job vacancies to fill in the second quarter compared with one year earlier. This was the fourth consecutive quarter with year-over-year increases in the number of job vacancies for the province. The rise in the number of job vacancies was spread across the province, with notable increases in the economic regions of Hamilton—Niagara Peninsula, Toronto, and Kitchener—Waterloo—Barrie. At the same time, the job vacancy rate in Ontario rose 0.2 percentage points to 3.0%, with agriculture, forestry, fishing and hunting as well as arts, entertainment and recreation registering the largest increases.

The number of vacancies in Quebec rose by 17,000 (+25.0%) and the job vacancy rate increased 0.4 percentage points to 2.4%. The recent trend of above-average growth in vacancies in the province helped raise Quebec's share of national vacancies to 18.2% in the second quarter of 2017 compared with 15.6% in the second quarter of 2015. The job vacancy rate rose in most sectors in Quebec, notably in construction, information and cultural industries, and in mining, quarrying, oil and gas. Increases in the number of job vacancies were registered in most areas of the province.

Job vacancies in British Columbia were up by 14,000 (+18.8%) in the second quarter compared with one year earlier. The provincial increase was concentrated in two of the seven economic regions of the province: Lower Mainland—Southwest (+10,000) and Vancouver Island and Coast (+1,900). These were also the economic regions where the job vacancy rate increased within the province.

British Columbia continued to have the highest job vacancy rate among the provinces at 4.0%, up from 3.5% one year earlier. In many sectors, British Columbia had a job vacancy rate above the national average, notably in accommodation and food services (6.4%), administration and support services (5.9%) and construction (5.2%).

Job vacancies in Alberta were up 8,500 (+19.9%) compared with one year earlier, a second consecutive quarter of year-over-year increases for this province. At the same time, its job vacancy rate rose to 2.6%, from 2.2% one year earlier. The increase in vacancies was spread across more sectors than in the previous quarter. The largest increases were in mining, quarrying, oil and gas (+1,300), construction (+1,300) and manufacturing (+1,100). Most economic regions in the province reported more vacancies than one year earlier. Notable increases in job vacancies were seen in Calgary, and in Banff-Jasper-Rocky Mountain House and Athabasca-Grande Prairie-Peace River.

The increase in vacancies in mining, quarrying, oil and gas in Alberta was consistent with the recent upward trend in national real gross domestic product and employment in this sector.

In Saskatchewan, employers reported 1,400 (+13.8%) more vacancies than in the second quarter of 2016. This was the first year-over-year increase in job vacancies for the province since the beginning of the series in 2015. Over the same period, the job vacancy rate rose 0.3 percentage points to 2.4%. Job vacancies increased in several sectors, including construction and manufacturing.

Widespread increase in the number of vacancies in the largest industrial sectors

In the second quarter, the 10 largest industrial sectors all had a higher number of job vacancies compared with one year earlier. Within these large sectors, increases in job vacancies were led by accommodation and food services, manufacturing, transportation and warehousing, as well as retail trade.

Among the 10 largest sectors, job vacancies rose the most in accommodation and food services (+8,800 or +15.0%). This was the second consecutive quarter with a year-over-year increase for this sector. At the same time, the job vacancy rate in the sector rose by 0.5 percentage points to 5.0%. The increase in the number of vacancies in the sector was spread across a majority of provinces, led by Ontario, British Columbia and Quebec.

Chart 3: Change in the number of job vacancies in the 10 largest industrial sectors between the second quarter of 2016 and the second quarter of 2017

Employers in manufacturing had 7,500 (+24.1%) more vacancies in the second quarter compared with one year earlier. Over the same period, the job vacancy rate rose 0.4 percentage points to 2.5%. Quebec accounted for close to half of the net increase in the number of vacancies in the sector.

The number of job vacancies in transportation and warehousing was up by 6,700 (+42.5%) in the second quarter. At the same time, the job vacancy rate in the sector rose by 0.8 percentage points to 2.9%. Increases in the number of job vacancies in the sector were observed in several subsectors, most notably truck transportation.

Job vacancies in retail trade were up by 6,500 (+13.0%) compared with one year earlier and the job vacancy rate rose to 2.9%, up from 2.5%. Job vacancies in the sector were up the most in Quebec, followed by British Columbia. Within retail trade, food and beverage stores registered the largest increase in job vacancies on a year-over-year basis. In contrast, job vacancies in sporting goods, hobby, book and music stores were down.

Largest number of job vacancies are in sales and service occupations

Among the 10 broad occupational categories, sales and service occupations (166,000) had the largest number of job vacancies, followed by trades, transport and equipment operators (73,000).

Chart 4: Number of job vacancies by broad occupational group (one-digit NOC¹), second quarter 2017

The average offered hourly wage is highest for management occupations

The highest average offered hourly wage was for management occupations ($34.45), followed by natural and applied sciences ($30.40). Similar to one year earlier, these occupation groups also had among the highest proportions of job vacancies that required a post-secondary education, that were for full-time work, and that were for permanent positions.

Looking at occupations at the three-digit National Occupational Classification level, 6 of the 10 occupation groups with the most job vacancies were in sales and services. Among the 10 groups, food counter attendants, kitchen helpers and related support occupations had the most job vacancies, with 29,000. Most of the 10 occupation groups with large numbers of vacancies had below-average offered wages. The sole notable exception was computer and information systems professionals, with an offered wage of $35.00.

Among the 10 groups, only harvesting, landscaping and natural resources labourers (76.4%) had a majority of their vacancies in temporary work. Of these, almost all were seasonal.

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/171012/dq171012a-eng.pdf

REUTERS. OCTOBER 12, 2017. Job vacancies rise in Canada in second-quarter with gains broad-based

OTTAWA (Reuters) - The number of job vacancies in Canada rose in the second quarter compared to the year before, with more openings seen broadly across regions and sectors, data from Statistics Canada showed on Thursday.

There were 460,000 jobs open in the second quarter, up 17.2 percent from the second quarter of last year. The job vacancy rate, which measures the share of unfilled jobs out of those available, rose to 2.9 percent from 2.5 percent.

A higher job vacancy rate often points to economic growth. Canada has seen robust job gains over the past year amid a strong economy that has prompted the Bank of Canada to raise interest rates twice in 2017 so far.

Job vacancies in the second quarter rose in nearly all the provinces, led by Ontario, Quebec and British Columbia, which have seen strong economic growth.

The number of job openings also rose in Alberta, which is recovering from the collapse in oil prices. The mining, quarrying and oil and gas sector saw some of the biggest increases in job vacancies, which is consistent with recent employment gains in the sector, the statistics agency said.

Nationally, higher job vacancies were seen in a number of sectors, including accommodation and food services, manufacturing, and transportation.

Reporting by Leah Schnurr; Editing by Chizu Nomiyama

INDUSTRY

The Globe and Mail. Canadian Press. 12 Oct 2017. Auto manufacturing may not rebound

A new report says there’s “no sustained indication” that Canada’s automotive manufacturing sector will return to prerecession levels of capital investment.
DesRosiers Automotive Consultants says the country’s loss of investment to Mexico and the southern United States has already been well documented.
Its new report says that capital spending for Canada’s motor-vehicle-assembly industry has averaged just $1.2-billion a year since 2010. That’s down from $2.3-billion annually on average from 2000 through 2009.

IMF - WORLD BANK

The Globe and Mail. Canadian Press. 12 Oct 2017. IMF report warns of Canada’s debt levels

The IMF warns in a new report about Canada’s high debt levels and higher-than-average pressure on Canadian households’ ability to pay down that debt.
The IMF says in its Global Financial Stability report released Wednesday that these dynamics in Canada’s private non-financial sector leaves its economy more sensitive to tighter financial conditions and weaker economic activity.
Canada was named along with Australia, Brazil, China and Korea as countries where the debt-service ratio has risen to high levels.

Global Affairs Canada. October 12, 2017. Minister Bibeau will travel to Washington, D.C., for Annual Meetings of the World Bank Group

Ottawa, Ontario - The Honourable Marie-Claude Bibeau, Minister of International Development and La Francophonie, will be in Washington, D.C., from October 13 to 14, 2017, to participate in the Annual Meetings of the World Bank Group.

During the visit, Minister Bibeau will discuss Canada’s Feminist International Assistance Policy and the important role of women and girls in achieving the UN Sustainable Development Goals. Canada will also seek to mobilize additional resources to support global investments in women and girls.

Minister Bibeau will emphasize the essential role of women in peacebuilding, climate change mitigation and adaptation efforts and the creation of new economic opportunities in communities.

The Minister will also attend an event on the Women Entrepreneurs Finance Initiative (We-Fi) hosted by Jim Yong Kim, President of the World Bank. Woman entrepreneurs play a critical role in economic development by boosting growth and creating jobs in developing countries. This event will focus on how the World Bank Group and its partners are helping more women to become successful entrepreneurs and leaders, including through the new We-Fi.

Quotes

“With its Feminist International Assistance Policy, Canada is working in partnership with the World Bank Group to reach our common goal of ending extreme poverty. With the right interventions, supported by sound public policy, women and girls can transform their households, their communities and their countries by unlocking a worldwide potential for economic growth.”

- Marie-Claude Bibeau, Minister of International Development and La Francophonie

Quick Facts

• The World Bank Group is one of Canada’s most important international development partners and delivers a significant share of Canada’s international development assistance.
• Canada is partnering with the World Bank Group through core operations and trust funds to advance key priorities, including empowering women and girls, reinforcing sexual and reproductive health and rights, promoting growth that works for everyone, mitigating the effects of climate change and promoting more inclusive societies that provide opportunities for youth.
• Canada’s support for We-Fi complements the country’s new Feminist International Assistance Policy, which recognizes that gender equality and the empowerment of women and girls are the best way to build a more peaceful, inclusive and prosperous world.

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LGCJ.: