CANADA ECONOMICS

APEC - TPP

THE GLOBE AND MAIL. THE CANADIAN PRESS. NOVEMBER 11, 2017. TRADE. How Canada allied with Mexico to fend off TPP pressure from Japan, Australia
ANDY BLATCHFORD, DANANG, VIETNAM

From the outside, it looked like yet another bilateral meeting between Justin Trudeau and his continental ally, Enrique Pena Nieto, on the sidelines of yet another leaders' summit.

But this time, the Canadian prime minister had a somewhat atypical agenda for his face-to-face chat with the Mexican president.

Trudeau and Pena Nieto, who have built a good relationship in NAFTA's negotiating trenches, gripped hands and exchanged warm greetings inside the meeting room.

It was the Canadian leader's first bilateral meeting on the margins of this year's Asia-Pacific Economic Co-operation summit at a palm-lined, seaside resort in Vietnam. The Canadian team had planned it that way.

A key topic of discussion, as they sank into the yellow cushions on their chairs, focused on the Trans-Pacific Partnership trade talks.

Heading into APEC, a senior Canadian government official said Ottawa had been anticipating pressure from TPP partners Japan and Australia, two countries that wanted to move forward quickly with sealing the 11-country deal.

The Trudeau government, on the other hand, wanted to throw some sand in the gears. Ottawa had been pushing the other parties to make changes to how the treaty would affect areas like culture, intellectual property and the auto sector.

"We were not going to be rushed into a deal," Trudeau told reporters at his closing APEC news conference on Saturday, echoing warnings he had issued repeatedly over the course of the week.

The official, who spoke on condition of anonymity due to the sensitivity of the matter, provided a peek behind the scenes of what followed during the TPP talks in Danang.

The Canadian team had no plans to agree to the deal at Friday's TPP leaders' meeting unless the modifications were made. And they knew they had some allies. They had also been informed about unease about the deal among a few of the other countries.

Indeed, the official said Japan and Australia tried to railroad Canada into committing to an agreement in principle Friday by arguing the other TPP members would be disappointed if they didn't deliver, the official said.

That's where Mexico fit in.

Trudeau explained his situation to Pena Nieto, who reassured him that if Canada didn't sign on to the TPP, Mexico wouldn't either, the official said.

Mexico had been sending similar signals of restraint about signing on to a new TPP. The talks were "very productive,' but more discussion was needed, Mexican Economy Minister Ildefonso Guajardo was reported to have said on Thursday.

The official added that Pena Nieto likely offered his support for two reasons: Mexico wasn't 100 per cent comfortable with the deal on the table and the fact Canada has stood by it through the tough NAFTA renegotiation with U.S. President Donald Trump.

Shortly after Pena Nieto left, Trudeau held his next bilateral of the day in the very same room — this time with Japanese Prime Minister Shinzo Abe. But this meeting lasted more than twice as long as the Mexico bilateral, a sign of tough talk.

Abe came to APEC looking for a win — an announcement from Pacific Rim leaders that their huge trade deal would move forward just months after it had been left for dead following Trump's withdrawal earlier in the year.

After the meeting, Trudeau and Abe were supposed to walk a short distance to a scheduled TPP leaders' meeting. Some of the TPP players, including Japan and Australia, had expected the meeting to be a signing ceremony for an agreement in principle, the official said.

But the signing never happened, much to the chagrin of many an Asian country.

Canada asked for a bilateral meeting with Japan out of his respect for Abe and the countries' strong relationship, the official said. The plan was to tell him where Canada was coming from.

Abe was also informed about Mexico's position on the matter, the official said.

Their meeting was positive and it stretched for about 50 minutes, even though it had only been scheduled for half that time. It cut into the planned TPP leaders' meeting and kept the other leaders waiting for them in the room.

Over the course of that meeting, Abe, the TPP meeting's co-chair, said he would have to postpone the event. He left to tell the others about the postponement and Trudeau stayed behind in the bilateral-meeting room.

Trudeau faced sharp criticism on social media and in news reports for not attending the TPP meeting. The official disputes the notion it was a snub because the leaders would mingle at APEC events over the next 24 hours anyway.

"We obviously had lots to talk about and at the end of that meeting it became clear that it was in everyone's interest to postpone the leaders' meeting on the TPP11," Trudeau said Saturday.

Staying away from the meeting wasn't a negotiating strategy, but it did yield results, the official claimed.

Late Friday, TPP trade ministers agreed to changes and new ways forward in areas Canada has been pressing for, like autos, cultural industries and the suspension of IP provisions from the original TPP. The official said the changes didn't come until after Canada informed the group it wasn't going to agree to the deal without them.

THE GLOBE AND MAIL. REUTERS. NOVEMBER 12, 2017. Hong Kong signs free trade and investment deals with ASEAN
JAMES POMFRET AND ENRICO DELA CRUZ

MANILA - Hong Kong signed free trade and investment agreements with the 10-nation Association of Southeast Asian Nations on Sunday, in what one of the Chinese territory's officials called a "loud and clear" vote against rising regional trade protectionism.

The pacts, which conclude nearly three years of talks, are expected to take effect on January 1, 2019, at the earliest. They aim to bring "deeper and bolder" integration of market access with the bloc, said Edward Yau, Hong Kong's commerce and development secretary.

"In the face of protectionist sentiments in other parts of the world, these two agreements are in fact a loud and clear vote from all of us here for freer and more open trade," Yau said.

"Hong Kong, being a free trade promoter and advocate of a strong, rule-based, multilateral trading system, will continue to take this pathway, continue to do our utmost."

Total merchandise trade between Hong Kong and ASEAN was $833-billion (Hong Kong) ($107-billion U.S.) last year, official figures show. Total services trade was $121-billion (Hong Kong) in 2015.

The ASEAN Hong Kong China Free Trade Agreement (AHKCFTA) was signed on the sidelines of a summit of the regional grouping in the Philippine capital of Manila.

It came after leaders attending an Asia-Pacific Economic Cooperation (APEC) summit in Vietnam agreed to tackle "unfair trade practices" and "market-distorting subsidies" in a statement on Saturday that bore the imprint of U.S. President Donald Trump's efforts to reshape the global trade landscape.

That summit offered a contrast between the vision of Trump's "America First" policy and the usual consensus favouring multinational deals that China now seeks to champion.

Hong Kong has one of the world's freest and most open economies, and the pacts will see many ASEAN countries gradually reduce or eliminate customs duties on Hong Kong goods. Professional services should also benefit, with increased investment flows, Yau said.

The partnership "will usher in greater trade synergies and more job opportunities for people and businesses in the region," said Philippine Trade and Industry Secretary Ramon Lopez.

The ASEAN grouping includes Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.

CANADA - CHINA

BLOOMBERG. November 10, 2017. This Is What Canadians Think About a Trade Deal With China
By Josh Wingrove

• Canada releases results of consultation on possible trade deal
• Canadians interested in trade deal, worried by other factors

Canadians have mixed feelings about a trade deal with China, seeing opportunities to sell to a major market while worrying about "inconsistent rule of law," the Canadian government says.

Prime Minister Justin Trudeau’s government, which is weighing whether or not to launch free trade talks with China, published a summary Friday of its public consultations on the matter. While intrigued by the potential of China as a market for goods such as crops and oil, Canadians worry about the country’s state-run economy and its legal system, particularly a lack of enforcement of intellectual property rights. The consultations also found concern about labor and human rights, as well as the environment.

“As a whole, Canadians told us that they see both opportunities and challenges associated with a possible Canada-China FTA,” according to the summary, which was posted on the Global Affairs Canada website.

The consultation heard “widespread concern about the rule of law in China,” with stakeholders saying any trade deal would need a robust dispute settlement measure. The agriculture and forestry sectors largely want a pact, while Canada’s metals sector hoped any deal would “meaningfully address Chinese over-production” of aluminum and steel, the report said.

Nafta Warning

Stakeholders expressed concern that China’s “unpredictable and opaque regulatory environment” stymies foreigners looking to do business and in some cases is a de facto means of protectionism. Lower tariffs in some cases are secondary to clearer regulatory regimes, it said. “Not all stakeholders are confident that an FTA with China would be able to meaningfully address the full spectrum of challenges faced by Canadian businesses trading with China,” the report said.


China is Canada’s second-largest trading partner, behind the U.S. and ahead of Mexico. Canada remains in talks with those two countries on changes to the North American Free Trade Agreement, and is also in talks over how to salvage the Trans Pacific Partnership deal, which was in part a check on China’s economic clout. Canada and China launched exploratory talks in September of 2016 to consider whether to begin actual negotiations.

James Moore, a former Canadian industry minister who sits on Trudeau’s Nafta advisory council, has warned against China trade talks, saying it would undermine Canada-U.S. relations and potentially hurt the Nafta talks.

Trudeau’s government nonetheless continues to signal interest in China. Pierre-Olivier Herbert, a spokesman for Trade Minister Francois-Philippe Champagne, said in a statement Friday that “a comprehensive relationship” with China “is in the best interests of all Canadians,” but gave no indication when Canada would make a decision on whether to proceed.

“We will continue to consult Canadians to ensure that any possible future economic discussions with China are informed by their views and by Canada’s interests in pursuing a rules-based, progressive and strategic trade agenda throughout Asia-Pacific that helps create new opportunities for growth and puts our middle class values front and center,” Herbert said.

The consultations included more than 600 stakeholders and other groups, the government said. The most heavily consulted business stakeholder group was agriculture.

AVIATION

REUTERS. NOVEMBER 12, 2017. UAE agrees $1.6 billion deal with Lockheed Martin to upgrade F-16 fighters

DUBAI (Reuters) - The United Arab Emirates will pay Lockheed Martin Corp (LMT.N) 6 billion dirhams ($1.63 billion) to upgrade 80 F-16 jet fighters, a Defense Ministry spokesman said on Sunday.

Lockheed Martin's logo is seen during Japan Aerospace 2016 air show in Tokyo, Japan, October 12, 2016. REUTERS/Kim Kyung-Hoon
Major General Abdullah Al Sayed Al Hashemi, Chief of the Military Committee and spokesman for the UAE Armed Forces was speaking at a news conference at the Dubai Airshow.

The ministry also announced other deals, including 66 million dirhams to U.S.-based OTNA INC for Blu-109 ammunition and a 35 million dirham agreement with Thales Communications and Security SAS (TCFP.PA) to secure defense communications.

The UAE is also interested in fifth-generation fighter jets with a preference for Lockheed Martin’s F-35, which is the only Western-made jet that fully meets those requirements.

Fifth generation is a definition that varies according to each manufacturer but broadly includes advanced stealth capability and a high level of computerized connectivity between fighter jets.

The U.S. company has sold the F-35 to a range of allies, including Turkey, South Korea, Japan, and Israel. Sales to the Gulf require more scrutiny, however, due to the U.S. government’s policy of helping Israel to maintain a qualitative military edge in the Middle East.

Al Hashemi said he was optimistic that the UAE would be able to buy the F-35 in the near future. “It is an excellent jet,” he said, declining to give details on talks with the U.S. administration.

Ishaq Saleh al Baloushi, executive director of Defense, Industry and Capability Development at the ministry of defense, said the UAE has been also in talks with Russia to buy dozens of Sukhoi 35 fighter jets.

The wealthy Gulf state has also been analyzing the European Eurofighter Typhoon and the French Dassault Rafale fighter jets for years, though deals for the fourth generation jets have never been secured.

“Nothing is finalised, we are talking to all. The technical team is working on this.” he said declining to give details.

The UAE has been waging war, along with its closest regional ally Saudi Arabia, against the Houthi group in neighboring Yemen, while tensions are also high with the Gulf states’ arch-foe Iran.

Reporting by Aziz El Yaakoubi and Stanley Carvalho; Editing by Catherine Evans

BLOOMBERG. November 12, 2017. Boeing Serves Up 787 Order at Dubai Show as Airbus Negotiates
By Benjamin D Katz  and Anurag Kotoky

• Boeing win spells gloom for Airbus in competing A350 offer
• Order shows carriers in region ready to return to spending

Boeing Co. pulled in an important order from Emirates for 40 787-10 wide-body aircraft, logging an early victory on the first day of the Dubai Air Show as arch-rival Airbus SE still held out for similar deals.

Dubai-based Emirates made the announcement at the biennial aviation event. The aircraft have a list price of $15.1 billion, though customers typically get steep discounts on large contracts. Emirates will take delivery of the Dreamliners from 2022, Chairman Sheikh Ahmed said at a press conference. It has yet to decide on the engine option.

The deal is an strategic win for Boeing and sets the tone for the most important aviation expo in the region. At the last show, the order flow had ebbed as airlines absorbed their massive aircraft restocking from previous years. The Boeing order also translates into a defeat for Airbus SA, which had fought to win back Emirates as a customer for its latest A350 wide-body, which competes with Boeing in that category.

Boeing muscling into the lead on the first day blindsided Airbus, which had slated an announcement at the same time in the same venue in which Boeing came out with the surprise Emirates win. The defeat is all the more crushing for Airbus as it had lost Emirates as a customer for 70 A350-1000s in 2014, and had hoped to claw back the deal as the carrier began reviewing a fresh order in that segment. Boeing separately unveiled a $1.9 billion order from Azerbaijan Airlines for five 787s and two freighter jets.

Emirates has staged a comeback this year. The company said last week that it boosted first-half profit 77 percent as it cut jobs and benefited from a more stable dollar, showing signs of recovery from its first annual earnings decline for five years.

Even with the big Boeing order, Emirates is likely not done buying aircraft at the expo. The company is also set to announce a deal with Airbus for about 36 additional A380 super-jumbos, people familiar with the matter have said. Asked about his order plans at the show earlier on Sunday, Emirates President Tim Clark declined to comment.

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LGCJ.: