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November 9, 2017

CANADA ECONOMICS



APEC - TPP - VIETNAM



PM. November 9, 2017. Prime Minister concludes official visit to Vietnam Ho Chi Minh City, Vietnam

 The Prime Minister, Justin Trudeau, today concluded his visit to Hanoi and Ho Chi Minh City, Vietnam, and will now travel to Da Nang, Vietnam, to attend the Asia Pacific Economic Cooperation (APEC) Leaders’ Meeting on
November 10 and 11.

While in Hanoi, Prime Minister Trudeau met with the Prime Minister of Vietnam, Nguyễn Xuân Phúc. Together, they announced a comprehensive partnership that will enhance cooperation between Canada and Vietnam, grow both economies, and strengthen the middle class.

During his meetings with Vietnamese leaders, Prime Minister Trudeau emphasized the importance of Canadian values, including respect for human rights, diversity, inclusion, and gender equality. The leaders also explored ways to deepen relations between both countries, increase trade and investment, and bolster our shared prosperity.

In Ho Chi Minh City, Prime Minister Trudeau visited the Stock Exchange, where he participated in a gong ceremony and met with Canadian and Vietnamese business leaders to discuss the benefits of progressive trade. Finally, he spoke to students at Ton Duc Thang University about the value of education, youth empowerment, and the strong educational connections between both countries.

Quote

“I thank Prime Minister Phúc and the people of Vietnam for their warmth and hospitality. I am encouraged by our joint partnership agreement and know it will go a long way in advancing our ongoing dialogue on the promotion and protection of human rights, and creating opportunities for our middle class.”

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

Quick facts

  • Prime Minister Trudeau also met with the President of Vietnam, Trần Đại Quang, the Chair of the National Assembly, Nguyễn Thị Kim Ngân, the Chairman of the People’s Committee, Nguyễn Thanh Phong, and the General Secretary of the Communist Party of Vietnam, Nguyễn Phú Trọng.
  • Discussions with Vietnamese leaders focused on advancing human rights; closer collaboration on areas of mutual interest, including trade and investment; and the important contribution of the large Vietnamese diaspora in Canada to strengthening people-to-people links.
  • Canada and Vietnam have strong diplomatic relations that were established in 1973.
  • Vietnam is Canada’s largest trading partner in the ASEAN region. In 2016, two-way merchandise trade between Canada and Vietnam totalled $5.5 billion.
  • Since 1990, Canada has provided over $1.3 billion to support development and poverty reduction initiatives in Vietnam.
  • Approximately 240,000 people of Vietnamese origin call Canada home, and there are more Vietnamese students studying in Canada than from any other country in Southeast Asia.

See also:

BLOOMBERG. 9 November 2017. Still No Deal for Nations Looking to Save TPP After Trump’s Exit
By Rosalind Mathieson

  • Australia says trade deal is ‘very close’ to being secured
  • Canada is aiming for a good TPP agreement over a fast deal

Pacific nations are yet to agree on how to salvage a blockbuster trade pact after days of talks in Vietnam, with Australia confident of an outcome but Canada warning it wants a good deal over a fast one.

Trade ministers meeting on the sidelines of the Asia-Pacific Economic Cooperation summit are due to present their proposal on the future of the Trans-Pacific Partnership to leaders on Friday. At this stage, though, they still don’t have a deal.

The pact, which would have covered 40 percent of the global economy, was thrown into disarray when Donald Trump withdrew the U.S. in one of his first acts as president, leaving the remaining 11 countries scrambling to keep the deal alive. The discussions in Vietnam have centered around suspending some parts of the agreement in a bid to move forward without America’s involvement.

“We are hopeful of securing a deal inside the next 24-48 hours,” Australian Trade Minister Steve Ciobo said Thursday in an interview in Vietnam. “We’re not there yet -- there’s still a bit of work to do but we’ve been making steady progress,” he said.

“Like any deal it’s not done until it’s done and there’s still work to be completed, but we are very close and with a final nudge over the next day I hope we will get there,” Ciobo added.

Malaysia has also said the countries are moving toward a deal. But that optimism contrasts with Canada, whose trade minister Francois-Philippe Champagne said in an interview Wednesday that speed shouldn’t take priority over getting a good agreement.

‘Difficult Discussions’

“We are at the table, we’re being constructive, we’re being creative but let’s be honest, some are difficult discussions,” Champagne said. "For Canada it’s far more important to get the right deal than a fast deal. What we are here to do is set the terms of trade in the Asia-Pacific region for decades to come.”

A briefing to wrap up the ministerial meeting late on Wednesday was canceled after a delay of several hours, and talks continued into Thursday.

The TPP was seen as a hallmark of U.S. engagement with Asia under the prior administration and a buffer against China’s rising clout. Then-Defense Secretary Ash Carter called it more strategically important than having another aircraft carrier battle group in the Pacific.

It would go beyond traditional deals by including issues like intellectual property, state-owned enterprises and labor rights. Champagne said Canadians expect any agreement to benefit the middle class and “give a chance to the small and medium-sized business to join the global trade.”

Ciobo said the U.S. withdrawal had “changed the metrics” for a number of countries. “That means there will be some aspects of it where we will agree to suspend the operation of certain parts of it, and that’s been the basis upon which we’ve been able to get now, I hope, an agreement.”

Speaking in an interview on Tuesday, Trade Minister Mustapa Mohamed indicated Malaysia had shifted from its prior stance that Trump’s decision to withdraw the U.S. meant the pact needed to be renegotiated.

“We’ve been talking with our colleagues on some provisions which could be suspended,” Mustapa said, without providing specifics. “Renegotiation would take a long time. All of us agreed that to renegotiate would probably take five, 10 years, so that’s not on. That’s a no go.”



NAFTA



BLOOMBERG. 9 November 2017. U.S. Seeks Restrictions on Mexican Trucking Under Nafta
By Greg Quinn , Josh Wingrove , and Eric Martin

  • Move could curb long-haul Mexico trucks from driving in U.S.
  • Proposal would be latest thorny issue in Nafta revamp

The U.S. has proposed another difficult change to the North American Free Trade Agreement that could eventually restrict long-haul Mexican truckers from operating in the country, according to people familiar with the discussions.

American negotiators asked to remove Mexico’s long-haul industry from a Nafta chapter on cross-border services, according to an industry official familiar with the proposal who isn’t authorized to speak publicly. That could open the door to restrictions on truckers, as losing Nafta trade protections and advantages would make it harder for Mexico to challenge any future U.S. requirements on trucks such as new safety checks.

One government official familiar with the text said the U.S. proposal would allow restrictions and limitations on Mexican trucking if certain conditions were reached, while another official described it as a broad industry exclusion that came during the last round of talks in October. Neither was authorized to speak publicly. The U.S. Trade Representative’s office declined to comment, and hasn’t made its proposals public. Reuters also reported last month that the U.S. was seeking fresh restrictions on long-haul trucks from Mexico, citing a person familiar with discussions.

The U.S. for years after Nafta came into effect resisted giving Mexican truckers the right to operate throughout the country. They were limited to bringing loads a short distance into the U.S., where they would be transferred to American outfits for final delivery. A dispute resolution panel backed Mexico on the matter in 2001, though the U.S. didn’t comply for years. Mexico at one point imposed tariffs in retaliation. It wasn’t until 2015 that the U.S. gave licensed Mexican truckers the right to haul cargo throughout the nation.

Contentious Demands

The U.S. proposal on Mexican trucking adds to a list of contentious demands that President Donald Trump’s team has signaled must be met to keep the 1994 pact alive. The U.S. has also asked to scrap a dispute mechanism that is essential to Canada, the third party to Nafta, and to tighten local content rules for cars.

Negotiators have already said they will extend talks through March 2018, which is longer than originally anticipated and could bring the issue into Mexico’s presidential campaign season and U.S. congressional elections. The next round of discussions is in Mexico City this month.

Mexico’s government opposes the new proposal on trucking, seeing it as a rollback of the rights won in the previous cross-border trucking dispute settlement, according to a person familiar with the position. Mexican Economy Minister Ildefonso Guajardo has said the government opposes anything that would weaken current market access under Nafta.

The U.S. has a $53.1 billion merchandise trade deficit with Mexico through September of this year, and a shortfall of $12.4 billion with Canada.

‘Not Surprising’

“It’s not surprising that this is being discussed, especially in view of the history of Washington’s policy approach toward Mexican trucks crossing the border,” said Stephen Laskowski, president of the Canadian Trucking Alliance, or CTA. Laskowski said he hasn’t seen a specific proposal on the matter, and the trucking industries in all three nations are working together to see Nafta improved.

The American Trucking Associations, in a joint statement last month with the CTA and Mexico’s main trucking lobby group, said Nafta benefits the three countries. On the other side of the debate, the International Brotherhood of Teamsters, a labor union, argues cross-border trucking takes away American jobs and creates safety risks.

Teamsters President Jim Hoffa suggested the U.S. was backing his view during the last round of talks. “The Teamsters and our allies among independent truckers and highway safety advocates will be pleased with the U.S. position on cross-border services,” he said in a statement in mid-October.

— With assistance by Andrew Mayeda



AVIATION



The Globe and Mail. 9 Nov 2017. Analysts question future of C Series under Airbus
NICOLAS VAN PRAET, MONTREAL

Two reports published this week offer a more contrarian take on Bombardier’s deal to hand control of its C Series airlines to Airbus to give the airplane a new and long life. Analysts are beginning to challenge the view that Bombardier Inc.’s deal to hand control of its marquee C Series airliner to Airbus SE will give the airplane a new and long life.
Two reports published this week offer a more contrarian take on the future of an Airbus-controlled C Series than the generally positive narrative accepted by investors, who have pushed up Bombardier shares 29 per cent since the Airbus deal was announced Oct. 16. The latest reports argue that, even if the C Series is revived, it still faces a difficult path to profit.
“The starting point for the C Series is not good,” Bernstein Research equity analyst Douglas Harned writes in a Nov. 6 report. “The fact that the Quebec government, after investing $1-billion in the C Series is willing to give Airbus a majority stake for free shows how far from profitability the program is.”
The analyst said he spoke recently with airline officials and concluded that the C Series is a hard sell at any price above the low $20-million (U.S.) range. He said he does not think Airbus brings anything to the C Series partnership that would allow the company to boost the price of the aircraft significantly. As a result, that means substantial cost reductions will be necessary to make the C Series work.
History suggests it won’t, the analyst says. Operating two final assembly lines as planned – one in Mirabel, Que., and one in Mobile, Ala., to serve the U.S. market – will only add to costs, he said. Bombardier said in a regulatory filing that setting up the Mobile site to build the C Series will cost $300-million and create more than 2,000 permanent jobs in the United States.
The idea that Airbus can use its market power to cut costs in the C Series supply chain sounds exactly like what Boeing Co. tried to do when it bought McDonnell Douglas and attempted to cut costs on the MD-95 plane program, Mr. Harned said. The problem that Boeing faced was that suppliers had no desire to invest to reduce costs in a low-volume aircraft program on which they were not making much profit in the first place, he said. Boeing was never able to sufficiently cut costs or raise the price for the plane, which was rebranded as the Boeing 717, and eventually shut the program down in 2006, roughly nine years after taking over McDonnell Douglas.
“The C Series, which we also see as a good airplane, faces the same challenges,” Mr. Harned said, adding the agreement with Bombardier brings little to Airbus except removing Bombardier as a challenger to the Airbus-Boeing duopoly. “Airbus will bring a stronger sales and support network to the C Series but we do not see that as sufficient to change the economics of this airplane.”
A separate Nov. 7 report by analysts with Moody’s Investors Service says the main challenge in the Airbus-Bombardier partnership will be questionable demand for the C Series in the years to come.
“If demand improves for commercial jets with 100 to 150 seats, bringing Airbus on as majority owner should be helpful to the C Series program as prospective customers may be more comfortable ordering the C Series given Airbus’s strengths, including in marketing and support of its aircraft,” the Moody’s analysts write. “But since its introduction in 2008, the C Series has been unable to attract meaningful interest from more than a small number of airlines and leasing companies.”
Bombardier’s C Series order book stood at about 340 planes as of Sept. 30, with firm orders from 17 customers. The company believes there is a market for about 6,000 planes seating 100 to 150 seats over the next 20 years and that it can capture at least half of the orders. That forecast might be ambitious, Moody’s says.
“For us to consider the C Series a success, orders will likely need to reach about 1,000 aircraft,” Moody’s says. “Given the relative youth of the global narrowbody fleet and the airline industry’s focus on maintaining an acceptable return on invested capital, we believe the C Series will not reach 1,000 in the next five years. At this level of demand, we would question whether the program would be profitable given its estimated development cost of more than $6-billion to date.”
Bombardier is now working to finalize its agreement with Airbus.
“Airbus joining the C Series program is a strong endorsement of the aircraft, the market potential and the opportunity for long-term value creation,” Bombardier chief executive Alain Bellemare said on the company’s Nov. 2 earnings call. “The overwhelming customer interest and positive feedback we have received in the past few weeks give us great confidence that we have the right partner and that we are on the right path to unlocking the full potential of the C Series.” Bombardier (BBD.B) Close: $3.04, down 6¢

BOEING. Nov. 9, 2017. Boeing, China Announce Airplane Sales During Presidential Trade Mission. Agreement covers 300 airplanes valued at more than $37 billion. Builds on a strong foundation and growing partnership

 BEIJING/PRNewswire/ -- Boeing (NYSE: BA) and China Aviation Suppliers Holding Company (CASC) today signed an agreement for 300 airplanes during a ceremony in Beijing. It was part of the United States trade mission to China, and was signed by Kevin McAllister, Boeing Commercial Airplanes president and CEO, in the presence of US President Donald Trump and China President Xi Jinping.

 The agreement includes orders and commitments for 300 Boeing single-aisle and twin-aisle airplanes. The airplanes are valued at more than $37 billion at list prices.

 "China is a valued customer and key partner, and we're proud that Boeing airplanes will be a part of its fleet growth for years to come," said McAllister. "Boeing and China have a strong history of working together based on great mutual respect, and these orders build on that foundation."

 Boeing and China continue to work on mutually beneficial ways to grow and support the aviation market. These efforts include industrial cooperation, the development of technologies to reduce aviation's environmental impact and enhance sustainability, and continued cooperation to support the safety, efficiency and capacity of China's air transport system.

REUTERS. NOVEMBER 9, 2017. Boeing signs deal to sell 300 planes worth $37 billion to China
Alwyn Scott

(Reuters) - Boeing Co (BA.N) said it signed an agreement on Thursday to sell 300 planes to China Aviation Supplies Holding Company worth $37 billion at list prices, one of several deals announced during a state visit by U.S. President Donald Trump to Beijing.

Boeing facilities are seen in Los Angeles, California, U.S. April 22, 2016. REUTERS/Lucy Nicholson/File Photo
General Electric Co (GE.N) said it had signed jet engine deals worth $2.5 billion and a $1 billion agreement for power plant equipment and services.

State-run China Aviation Supplies, which leases planes to Chinese airlines, said the Boeing agreement covered 260 B-737s and 40 B-777s and B-787s. The breakdown between firm orders and non-binding commitments was not immediately available.

Analysts said, however, that some of the orders may be among more than 300 from undisclosed buyers posted this year, and it was not clear how much of the China deal was new business.

The new agreement also may overlap substantially with a similar, 300-plane agreement Boeing signed during Chinese President Xi Jinping’s 2015 visit to the United States..

That deal, valued at $38 billion at the time, included orders and commitments for 190 B-737s and 50 Boeing wide-body planes, as well as leases for an additional 60 B-737s.

A spokesman for the planemaker declined to comment on what proportion of the new China agreement represented new or existing orders, but it was believed that some of the orders were already in Boeing’s backlog. Boeing typically lets plane buyers determine what details to reveal about orders.

Boeing shares were down 1.4 percent at $260.30.

STRONG DEMAND

Boeing says one out of every four jetliners now rolling off its assembly lines is being delivered to Chinese customers, suggesting Chinese demand is strong, despite vagueness about how many actual Chinese orders it has won.

Plane makers also acknowledge a multi-step wooing process with customers such as China. The government first determines how many airplanes its airlines will need, allowing detailed contract discussions to take place. After talks conclude, the government must give final approval to the contracts before the orders become firm.

Some customers ask Boeing to not identify them as buyers even on firm orders, and China is typically among those, according to industry experts. Boeing had 323 orders by unidentified customers as of Nov. 7, of which 282 were for its 737 narrow body family.

Separately on Thursday, Boeing said it had received orders for 42 B-737 MAX jets and 10 B-787-9 Dreamliners from CDB Aviation, a unit of China Development Bank Financial Leasing Co (1606.HK). The order was worth $7.4 billion at list prices.

Boeing and European rival Airbus (AIR.PA) have been jostling for market share in China, the world’s fastest growing aviation market, with both opening assembly plants in the country.

China’s owned aircraft fleet is currently equally split between Boeing and Airbus, but going by order book trends, Boeing seems to have gained a big lead in terms of the number of aircraft orders from China, said Corrine Png, chief executive of transport research firm Crucial Perspective.

China Aviation Supplies has also played a prominent role in deals announced during previous government exchanges.

In July, it agreed to buy 140 aircraft from Airbus in a deal worth $23 billion at list prices during a visit by Xi to Germany. It also was among three Chinese companies involved in the 2015 Boeing order.

Boeing’s latest signing in China follows an order for 39 wide-body jets from Singapore Airlines last month.

Earlier on Thursday, General Electric said it had signed deals worth $3.5 billion in China.

They included a $1.4 billion agreement for GEnx engines for 10 B-787-9 Dreamliners, signed with Juneyao Airlines Co Ltd (603885.SS) and ICBC Leasing, the leasing arm of state bank Industrial and Commercial Bank of China Ltd (601398.SS).

It also included an order valued at $1.1 billion for 80 LEAP engines made by CFM International, a joint venture between GE and Safran SA (SAF.PA) of France.

GE’s power division also signed a partnership agreement with China Datang Group to provide gas- and steam-powered turbines and components, plus services and digital technology for power projects in China. It valued that deal at $1 billion.

A GE spokesperson said its engine orders were new, and deferred to Boeing on how much of aircraft order was new.

Reporting by Brenda Goh in SHANGHAI, Ben Blanchard and Stella Qiu in BEIJING, Additional reporting by Jamie Freed in SINGAPORE and Alwyn Scott in NEW YORK; Editing by Marguerita Choy and Bernadette Baum

REUTERS. NOVEMBER 8, 2017. Airbus eyes Canadian military deal, further cooperation with Bombardier
Leah Schnurr, Allison Lampert

OTTAWA/MONTREAL (Reuters) - Airbus SE (AIR.PA) could cooperate further with Bombardier Inc (BBDb.TO) beyond a recent venture in the CSeries jets, if its fighter jet is permitted to compete in a Canadian military procurement, and its partners agree, an executive said on Wednesday.

Canada said last year it will launch an open competition to replace its aging fleet of fighter jets and a request for proposal for the open competition is expected in 2019.

Dirk Hoke, chief executive of Airbus Defense and Space, said the Eurofighter Typhoon fighter jet could be an option for further collaboration with Bombardier, although he did not specify further.

“We will definitely also look at additional potential further cooperation with Bombardier beyond just the CSeries,” Hoke told Reuters on the sidelines of an Ottawa aerospace conference, adding that he was “very optimistic and positive about us entering this competition.”

Airbus last month agreed to take a majority stake in Bombardier’s CSeries jets program, bolstering the Canadian plane’s sales and giving it a possible way out of a damaging trade dispute with Boeing Co (BA.N) and U.S. regulators.

The CSeries trade dispute has muddied a potential interim military contract between Boeing and Canada for 18 Super Hornet fighter jets, creating new opportunities for rivals like Airbus, Dassault Aviation SA (AVMD.PA) and Lockheed Martin(LMT.N).

Boeing and Canada had initially discussed purchasing the fighters as a stop-gap measure while the country prepared an open five-year competition to replace its aging fleet of 77 Boeing CF-18 fighter jets. Canada has halted talks with Boeing because of the dispute.

Hoke said Airbus is not considering jumping into the interim bid for fighter jets and is waiting to see the specifics from the Canadian government on the open competition.

“Right now, we have a very positive feeling about it but of course we have to see ... what (are) the specifications that have been finally defined and confirmed.”

In 2016, Canada selected Airbus C295W aircraft for its fixed-wing search and rescue program, estimated at C$3 billion ($2.36 billion).

Boeing has accused Bombardier of receiving illegal subsidies and dumping the CSeries at “absurdly low” prices in the U.S. market to win a key April 2016 order from Delta Air Lines Inc (DAL.N). The U.S. Commerce Department has notched up proposed trade duties on U.S. sales of CSeries jets at nearly 300 percent, in a case that will be decided next year at the International Trade Commission.

Reporting By Leah Schnurr and Allison Lampert. Additional reporting by David Ljunggren in Ottawa; Editing by Chizu Nomiyama

REUTERS. NOVEMBER 8, 2017. Airbus trails Boeing in orders heading into Dubai showdown
Tim Hepher

PARIS (Reuters) - Airbus (AIR.PA) sold 24 aircraft and delivered 63 in October, leaving it well behind rival Boeing in the hunt for new orders going into next week’s Dubai Airshow, but on course to reach its recently softened target of 700 deliveries for the year.

FILE PHOTO: The logo of Airbus Group is seen on the company's headquarters building in Toulouse, Southwestern France, April 18, 2017. REUTERS/Regis Duvignau/File Photo
Data from the European planemaker showed that orders for the year so far had reached 343 aircraft, or 288 when adjusted for cancellations that included new withdrawals of 7 out of 13 orders for A320 jets previously placed by Siberia Airlines.

Airbus is struggling to catch up with Boeing in this year’s order race as Boeing continues to expand under a rejuvenated management and Airbus appears destabilised by probes into the use of middlemen.

Boeing notched up 621 orders between Jan. 1 and Oct. 24, the latest period for which its data is available, or 538 after cancellations. It has 65 percent so far this year of a market usually shared roughly equally with its European rival.

The U.S. planemaker is expected to extend its lead with a significant order announcement from China on Thursday as President Donald Trump visits Beijing, coming on top of an order for 39 wide-body jets from Singapore Airlines last month.

However, analysts said some of the orders may be among the more than 300 from undisclosed buyers posted this year, and that it was not yet understood how much of the anticipated China deal would be entirely new business.

Boeing’s orders also include 28 aircraft for its military division and 5 from collapsed Monarch Airlines, which a UK judge said on Wednesday was unlikely to fly again..

After supplier problems, Airbus deliveries picked up in October when it handed over 63 planes including 22 A320neo-family aircraft recently hit by engine problems, and 8 A350s.

That brings the total to 513 for the first 10 months. Airbus maintains an official target of 700 deliveries, but told analysts last week that its de facto target of 720 aircraft, given verbally to investors, was no longer achievable.

Qatar Airways took delivery in October of three out of four aircraft it had previously canceled over supplier issues.

The largest A350 customer has reduced its order to 76 aircraft but agreed to reshuffle upcoming delivery slots.

This means Airbus will eventually get less revenue than originally planned from the sale of 80 jets to Qatar, but its cashflow will not take a hit as aircraft that have already been built will be delivered, preventing a build-up of inventory.

Reporting by Tim Hepher; Editing by Robin Pomeroy



INTERNATIONAL TRADE



EDC. NOVEMBER 9, 2017. WEEKLY COMMENTARY. Engine No 2 Warming Up
Peter G. Hall, Vice President and Chief Economist

Europe seems overshadowed these days by the center stage drama going on in the US. Raise Europe in casual conversation, and it elicits a picture of messy public finances, bad banks, schismatic politics and sluggish growth. Doomsayers have long since pegged Europe as the lead in the boots of the global economy, destined for “sluggish-at-best” future growth, and generally emblematic of the underwhelming performance of the world’s richer lands. Are they right, or is something changing?

What is evident is that the answer really matters. Europe packs a mighty punch in the global economy. Its long-run potential growth – estimated by some as low as 1.1 per cent – still pulls along 22 per cent of global GDP, just 2 per cent less than the US economy. Knock it down and large parts of the global economy are also reeling. Europe’s growth-struggles over the past decade have definitely not gone unnoticed, with Asian economies often lamenting the weakness of European demand as one of their greater concerns. Well, that’s about to change. The US economy has for some time been firing up and pulling the rest of the world along. Engine No 2 is now warming up very nicely, and will soon be doing some pulling on its own. How can we tell?

Increasingly, key European indicators are impressing economy-watchers. Let’s start on the business side of things. Excluding construction, industrial production in August zoomed to its highest level in a decade, and the trend of the past year is more rapid than at any point following the immediate post-recession phase. Isolate manufacturing, and it’s doing even better. The August level fell just shy of the pre-recession peak, after a scorching one-year run-up.

It doesn’t stop there. Through October, buyers in European firms were in an increasingly bullish mood about both current and near-future prospects. The Markit Purchasing Managers’ Index for manufacturing hit 58.6, well ahead of the growth/decline mark. The corresponding services indicator remained close to a cyclical high in October, a sign of economic stabilization. Not surprisingly, business sentiment is running high. The Industrial Confidence Indicator produced by the EC is at a new record high for the series, a remarkable achievement given the long history of this indicator. The volume of orders has seen a particularly dramatic rise in the past 18 months.

Perhaps even more inspiring is the recent rise in construction confidence. This is one that typically takes a longer time to rise, as increased activity uses up spare capacity in the system before needing more. We have long felt that there is a large pile-up of pent-up demand for construction of new production facilities in Europe, but it now seems to be translating into action. Sentiment in Europe’s construction sector is up remarkably in the past two years, and is continuing to rise. It is responding to capacity conditions, which are rapidly tightened, and recently hit a new post-stimulus-period high.

So much for business; how about the more substantial consumer story? Hiring activity has been strong enough to drive Europe’s area-wide unemployment rate down close to cyclical lows. It’s not there yet, but the rapid descent is once again raising fears of labour shortages and escalating wages – a very good problem to have, compared to some of recent history’s more pressing woes. As such, Europeans seem to be in spending mode. The most recent flash estimate of consumer confidence has pushed it to a post-recession high, hopefully a sign that the average person is re-emerging as a force in the economy that portends well for near-term growth.

Forecasters are paying attention. European growth beat expectations by a long shot this year, and chances are very good that 2018 will be no different. Large institutions – notably the IMF and the OECD – are revising their forecasts upward, a rare about-face in recent times. With the new CETA agreement, the timing could hardly be better for Canadian exporters. The turn of events has raised key questions about the appropriateness of current ECB policy – for a change, a good problem to have.

The bottom line? Europe – global economic engine number two – is finally firing up. This has to be some of the best news the world economy has heard in a long, long time. Economies everywhere will soon be feeling the positive effects.



CANADA - UKRAINE



Global Affairs Canada. November 9, 2017. Statement on the situation in Ukraine

Ottawa, Ontario - The Honourable Chrystia Freeland, Minister of Foreign Affairs, today issued the following statement:

“Our government has been unwavering in its support for the people of Ukraine and Ukraine's territorial integrity. We condemn Russia's illegal annexation of Crimea, the ongoing violence and ongoing support to insurgents in eastern Ukraine.

"Around the world Canada has been leading conversations with a number of countries about the viability and utility of peacekeeping and policing in Ukraine. The Prime Minister has raised the issue with the President of Ukraine and with the Chancellor of Germany.

"I have personally explored the feasibility and prospects of such a mission with the President and the Prime Minister of Ukraine, with the US Secretary of State, with US Special Envoy Kurt Volker, and with the UN Secretary General last week. In recent weeks, I have spoken to several European governments and touched on this important issue with all of them.

"Our government has been at the heart of international efforts to support Ukraine and we are working hard to ensure any peacekeeping effort guarantees Ukraine’s sovereignty and territorial integrity. The Canada-led multinational battlegroup in Latvia, as part of NATO’s enhanced Forward Presence, is an example of Canada’s leadership and ongoing commitment to regional security.

"The people of Ukraine can count on the continued and unwavering friendship and support of Canada.”

The Globe and Mail. 9 Nov 2017. Pressure builds on Ottawa to launch Ukraine peacekeeping mission 
STEVEN CHASE, With a report from Canadian Press

The defence of Ukraine’s sovereignty and territorial integrity should be a priority for Canada’s government on the international stage. Now is the time to act. Andrew Scheer Leader of the Conservative Party of Canada, in remarks to be delivered at a news conference on Thursday

The Trudeau government is facing increasing pressure to take a leadership role in war-torn eastern Ukraine by spearheading a UN peacekeeping mission to help stabilize the conflict between Kiev and Russian-backed belligerents.
Growing support within Canada for such a deployment comes as the Liberals prepare to unveil a pledge to commit troops to United Nations peace support missions. Their plans are still confidential.
Official Opposition Leader Andrew Scheer is joining the call of a Ukrainian-Canadian lobby group in endorsing the idea of a Ukraine mission led by Canada. He will use a news conference Thursday to urge Ottawa to blaze the way for this deployment. A UN mission would nevertheless need to be approved by the United Nations Security Council, whose members include Russia.
More than 1.3 million Canadians, including Foreign Affairs Minister Chrystia Freeland, can trace their heritage to Ukraine, where a threeyear-old conflict between the Kiev government and Moscow-supported fighters continues.
A UN peace support mission “would allow Ukraine to restore control over its eastern border with Russia, ensuring the Russian military stays within its own country, and out of Ukraine,” Mr. Scheer says in remarks to be delivered Thursday.
His Conservative Party is calling for a peacekeeping mission that would be located at the Ukrainian-Russian border rather than at the front line itself in the Donbass region of eastern Ukraine.
The war in eastern Ukraine – which ignited after Russia annexed Ukraine’s Crimean peninsula in early 2014, despite widespread condemnation from the West – has claimed more than 10,200 lives so far.
There is currently no UN-mandated peacekeeping mission in Ukraine. Ukrainian President Petro Poroshenko has urged the UN Security Council to dispatch such a mission. He has also rejected a separate Russian proposal for a peacekeeping mission in the region as an effort to “freeze the conflict” in place.
The Ukrainian Canadian Congress for several months has been calling both privately and publicly for Canada to lead a UN mission in Ukraine. The lobby group representing Canadians of Ukrainian descent has proposed this in briefings for the federal government and when speaking to MPs. UCC president Paul Grod said this proposal has the support of the Central and Eastern European Council of Canada, groups representing four million Canadians of Central European and Eastern European descent.
In early September, Russian President Vladimir Putin proposed his own version of a peacekeeping mission – which critics called insincere but others suggested might be his attempt to find a way out of the conflict. Mr. Putin called for a peacekeeping force that would be limited to policing the front line of the war and restricted to six months, and focused primarily on protecting monitors from the Organization for Security and Cooperation in Europe (OSCE) who are supposed to be mediating ceasefire efforts.
Eastern Ukraine has been a deadly place since April, 2014, and efforts to broker a stable ceasefire have failed.
Canadian troops would face tremendous danger there unless the arms buildup in the region was scaled back. Shelling, shooting and mines or booby traps have killed scores over three years.
The Office of the United Nations High Commissioner for Human Rights earlier this year said it had tallied up 10,225 deaths and 24,541 injuries in the three years of fighting between April 14, 2014, and Aug. 15, 2017. Those killed or injured include civilians, Ukrainian armed forces as well as members of the other armed groups, the office said.
But established UN peacekeeping missions are deadly, too. The mission in Mali has recorded more than 130 peacekeeper deaths in the past five years.
Earlier this fall, Prime Minister Justin Trudeau voiced support for a potential UN mission in Ukraine, during a visit from Mr. Poroshenko, but stopped short of committing Canadian troops.
In 2016, the Liberals – eager to restore Canada’s participation in peacekeeping missions after decades of decline – announced they were setting aside $500-million for such missions and pledged to send 600 soldiers and 150 police officers to UN peace support missions.
The Trudeau government has been silent on commitment since.
The Liberals are expected, however, to announce a peacekeeping pledge shortly as Canada prepares to host a summit on peace support operations in Vancouver starting Nov. 14.
Mr. Scheer, in remarks he will deliver Thursday, says Canadian leadership in a Ukraine peacekeeping mission would be in line with Ottawa’s strong support for Kiev over the past three years.
“The defence of Ukraine’s sovereignty and territorial integrity should be a priority for Canada’s government on the international stage,” he says. “Now is the time to act.”
Separately, The Canadian Press reports that Academy Award-winning actress Angelina Jolie is expected to lend her star power to next week’s peacekeeping summit in Vancouver.
A draft program for the two-day meeting says Ms. Jolie will deliver a keynote address at the event, appearing as a special envoy of the UN High Commissioner for Refugees and co-founder of the Preventing Sexual Violence Initiative.
The other keynote address will be delivered by Patrick Shanahan, the U.S. deputy secretary of defence.
Representatives from 80 countries, including approximately 50 defence ministers, are expected to attend.
The government has reportedly been in talks with UN officials about where to send Canadian peacekeepers; options include sending helicopters to Mali and Haiti, a transport plane to Uganda and troops to the Golan Heights.

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