e-Gonomics

CANADA ECONOMICS

INTERNATIONAL TRADE

The Globe and Mail. 29 Nov 2017. PM urged to delay China trade talks until Canadian couple freed
ROBERT FIFE
STEVEN CHASE

Prime Minister Justin Trudeau is being urged to postpone free-trade talks with China until the authoritarian regime frees two Canadians who have been detained for more than 20 months over a customs duty dispute.
Amy Chang, whose father and mother have been trapped in China since March, 2016, wrote to Mr. Trudeau on Monday, asking him to “directly help free my parents” when he meets President Xi Jinping and Prime Minister Li Keqiang next week.
Mr. Trudeau leaves for Beijing on Saturday to meet China’s top leaders, where they are expected to formally announce bilateral freetrade talks – negotiations that will likely take years.
Ms. Chang says the Chinese government has criminalized what should merely be a commercial dispute and that her parents’ treatment should serve as a warning to people looking to do business in China.
The case has raised questions about the Liberal government’s pursuit of a special relationship with China – a country that doesn’t have an independent justice system and where graft and corruption are common.
John Chang, who emigrated from Taiwan in 2000, was once celebrated in Canada for his entrepreneurial skills and regularly participated in trade missions to China with Canadian government officials. He was named an RBC Top 25 Canadian Immigrant award winner in 2015 for building a wine business from Richmond, B.C., with principal exports to the Asian market.
“I am asking you to delay launching formal free-trade negotiations with China until my parents are back home safely in Canada,” Ms. Chang wrote in the letter to Mr. Trudeau that was provided to The Globe and Mail.
“If your government cannot protect and defend honest Canadian business people in China today, how will you be able to protect and defend honest Canadians doing business in China after we have a free-trade agreement?”
Her parents have always been strong proponents of trade with China, she told Mr. Trudeau, and would normally be joining the Prime Minister on such a visit.
“But my father cannot join you on your trade mission because he is sitting in a Chinese detention centre, denied visits from his wife and family and becoming sicker by the day.”
Mr. Chang and Allison Lu were arrested on allegations of failing to pay sufficient duties on ice wine shipments to China – charges denied by the couple. Since their arrest, Mr. Chang has been detained in a Shanghai prison while his wife has been barred from leaving China.
Ms. Chang told the Prime Minister that her father, who owns Lulu Island Winery, has lost one third of his body weight since his imprisonment and she fears for his life. Her father is battling hepatitis C and two cancerous liver tumours.
“Prior to his illegal detention, my father has had success managing his illness through careful attention to his diet.
“This is no longer possible. I fear that my father is now at serious risk of dying in his prison cell.”
Foreign Affairs Minister Chrystia Freeland assured Ms. Chang last June that Ottawa was working hard to persuade Beijing to allow her parents to return home.
Since then, Ms. Chang said she has heard little from the government about what it is doing to free her parents.
Ms. Freeland’s office, asked for comment, said the government remains “deeply concerned by the case” and is following it closely. “Minister Freeland has raised the case with Chinese authorities at the highest levels,” spokesman Adam Austen said in an e-mailed statement.
“Most recently, she raised it directly with her Chinese counterpart during the APEC summit. She also discussed the case while in Beijing this past August.”
Sophie Richardson, China director at Human Rights Watch, said Mr. Trudeau must demand the release of the couple and push China’s leaders to respect the rule of law and not arbitrarily throw people into prison.
“If Canada and others don’t push China to do a better job of respecting the rule of law, this is the reality of doing business there. How do you expect contracts to be enforced?” she said.
Mr. Chang and Ms. Lu faced a criminal trial in Shanghai last May, accused of smuggling wine into China at cut-rate prices. No verdict has yet been rendered, but China’s legal system has a conviction rate of 99.6 per cent.
China says the couple owe Beijing nearly $20-million and seized 267,000 bottles of their wine; the maximum punishment for smuggling is life in prison and a fine up to five times the amount owed.
At the trial, Chinese authorities enlisted the testimony of a former employee of Lulu Island Winery, who told the court he warned his bosses years ago that they needed to raise the price they were declaring to Chinese customs.
Chinese authorities alleged that while Lulu Island sold its wine for $69 to $95 in Canada, it declared its value to Chinese customs for much less, in some cases well below $10.
The winery says the Canadian prices are in-store retail prices while the import value declared in China was in line with how other foreign importers were pricing their wine for customs.

REUTERS. NOVEMBER 29, 2017. Canada's Trudeau set for tough China talks on trade deal, plane sales
David Ljunggren, Allison Lampert

OTTAWA/MONTREAL (Reuters) - Just days ahead of a Beijing visit, Canadian Prime Minister Justin Trudeau has yet to decide on whether to launch talks on a free trade deal that China has long pressed for and could face a cool reception over his government’s decision to snub Chinese interest in Bombardier.

China wants a free trade pact similar to the ones it has with Australia and New Zealand but Trudeau, aware of domestic unease at the idea, is moving slowly.

“No decisions have been taken at this end as a government,” a Canadian source familiar with the matter said about the possibility of talks being announced during Trudeau’s Dec 3-7 visit. Trudeau’s office declined to comment.

Trudeau is caught in a tough position. Although polls consistently show Canadians are split over the merits of a trade deal, Canada needs to diversify exports to offset the possible damage done if the United States pulls out of NAFTA. Any China trade deal would take a decade to complete, insiders say.

The prime minister also faces pressure stemming from distinct signs of impatience from China. Beijing laments what it sees as Canada’s “vague thinking” about a deal, said one person briefed on the Chinese position who asked to remain anonymous given the sensitivity of the situation.

The Canadian source said the government was aware of Chinese impatience but, while diversification is important, Ottawa was setting “a high bar in terms of what trade means for Canadians.”

“While they may be impatient to move forward, I think they understand that,” the source said.

Foreign executives operating in China complain about difficult working conditions, arbitrary decisions by local courts and lack of protection for intellectual property rights.

The visit comes as plane maker Bombardier Inc is eager to win a breakthrough order from Chinese carriers for its CSeries jet, whose fuselage is made in China.

But the chance of nabbing such deals has become more cloudy after Canada encouraged Bombardier to sell a controlling stake in the CSeries program to Airbus SE rather than a Chinese firm.

Some Chinese commentators called Bombardier “mad” for spurning a China tie-up, while others expressed dismay saying that it was a missed opportunity to gain access to the firm’s valuable technology.

Trudeau, who will meet President Xi Jinping and Premier Li Keqiang, agreed last year to hold annual talks with senior Chinese figures. An official Chinese statement on Trudeau’s visit did not mention trade once.

With additional reporting by Brenda Goh in ShanghaiEditing by Chizu Nomiyama

The Globe and Mail. 29 Nov 2017. OPINION. Canada is ready for domestic free trade
HOWARD ANGLIN
MICHEL KELLY-GAGNON
MARCO NAVARRO-GÉNIE

Five years ago, when Gérard Comeau contested a $300 fine for transporting liquor across provincial borders, he had no idea that he was planting the seeds of a legal battle that could end up radically reforming trade within Canada.
The retired power worker had been stopped by police for bringing to New Brunswick 14 cases of beer and three bottles of spirits that he had purchased in Quebec. When he was fined for violating an old provincial law, he fought back, winning his case before the Provincial Court.
After a fruitless attempt to have the case heard by the New Brunswick Court of Appeal, the provincial government turned to the Supreme Court of Canada, which will hear the case in less than two weeks. The top court will have to decide whether Canadians have the right to transport legally purchased goods, including alcohol, from one province to another.
Canadians’ opinions are clear on this point: They believe that they should already have this right. A poll conducted by Ipsos on behalf of the Montreal Economic Institute (MEI) shows that an overwhelming number of Canadians (89 per cent) think they should be allowed to bring any legally purchased product from one province to another.
When asked the same question about alcohol, a very large majority (78 per cent) are of the opinion that they should be allowed to bring any amount of beer or wine from one province into another. Only 8 per cent of Canadians disagree. The end of Prohibition began almost a century ago. Why should Prohibition-era laws still restrict our freedom?
About 84 per cent of Canadians also think they should be allowed to order wine directly from a winery in another province. And only 14 per cent of Canadians believe that provinces with alcohol-sale monopolies should be allowed to protect them by fining citizens who buy wine or beer from other provinces, as happened to Mr. Comeau.
Canada is perceived around the world as a champion of free trade, thanks to its strong defence of NAFTA, its recent conclusion of a freetrade agreement with the European Union and its efforts to expand free trade in Asia. Strangely, this recognition of the advantages of trade are not reflected inside Canada’s own borders, where many obstacles to free trade persist, despite strong evidence Canadians oppose them.
Even when the justifications that provinces offer for these restrictions are put to Canadians, they don’t buy them. According to the Ipsos poll, very few Canadians think that provincial governments should be allowed to impose restrictions against goods from other provinces to protect their own industries (16 per cent) or to collect more revenue (12 per cent).
Clearly, Canadians understand the advantages of free trade and want to enjoy those benefits within their own country.
The federal and provincial governments’ reactions to the Comeau case, which are to defend these unpopular restrictions, are backward-looking. They continue to miss the opportunity to reaffirm, loud and clear, one of the central ideas behind the Canadian federation: the creation of a true common market. Instead, they have chosen to appear before the Supreme Court against Mr. Comeau in order to preserve a status quo that costs Canadians tens of billions of dollars each year.
That is why the Canadian Constitution Foundation (CCF) became involved in Mr. Comeau’s defence in the first place and why the MEI will be standing alongside Mr. Comeau as an intervenor before the Supreme Court. And it is why these organizations – the CCF, the MEI and the Atlantic Institute for Market Studies – will continue to promote the benefits of free trade within Canada, regardless of the outcome of the court case.
That said, we hope that the Court will see the wisdom of the trial judge’s decision, which struck down this obsolete and unconstitutional law and upheld the original vision of Confederation as one country with a single economic market. This would not just be good news for Mr. Comeau. It would be an extraordinary boost to the economy of the provinces – and it would be a wonderful gift for Canadians on the occasion of the country’s 150th birthday. Howard Anglin is executive director of the Canadian Constitution Foundation. Michel Kelly-Gagnon is president and CEO at Montreal Economic Institute. Marco NavarroGénie is president and CEO, Atlantic Institute for Market Studies.

ENERGY

Natural Resources Canada. November 29, 2017. Statement from the Honourable Jim Carr on Canada’s Letter to the National Energy Board Supporting the Establishment of a Standing Panel to Determine Trans Mountain’s Compliance with Provincial and Municipal Permits. Statements

Ottawa - “Canadians want an energy system that creates good, middle-class jobs while protecting and preserving the environment for future generations.

“Yesterday, Canada filed a letter to the National Energy Board, indicating the Government’s support for establishing a Standing Panel to determine ongoing compliance by Kinder Morgan for the project conditions of the Trans Mountain Pipeline Expansion.

“The Government has taken an important step to ensure that when a natural resource project is approved, it proceeds in a timely fashion and continues to generate economic benefits for all Canadians.

“The Government is supportive of establishing a process that would assist in resolving any conflicts over the issuance of municipal or provincial permits and avoid unnecessary delays to project construction or regulatory compliance.”

National Energy Board. November 29, 2017. National Energy Board hearing on Trans Mountain motion and constitutional question begins

Calgary – The National Energy Board (NEB) is holding an oral hearing on a motion from Trans Mountain Pipeline ULC which includes a notice of constitutional question. The oral hearing will begin at 12:30 pm (MST) on November 29 at the National Energy Board’s offices in Calgary.

On October 26, 2017 Trans Mountain filed a notice of motion and notice of constitutional question with the NEB regarding the Trans Mountain Expansion Project. In its motion, Trans Mountain asked the NEB to issue an order declaring that certain sections of the City of Burnaby’s bylaws do not apply to work the company will carry out at its Burnaby Terminal and Westridge Marine Terminal, or its use of a temporary worksite.

The company also asked the NEB to declare that it is not required to meet a prior commitment to comply with such bylaws in these circumstances. Trans Mountain indicated that it intends to raise constitutional questions related to the applicability and operability of some of Burnaby’s municipal bylaws in relation to the project. The full text of Trans Mountain’s motion [Filing A87282] is available on the NEB website.

Before deciding on this motion, the Board will hear from Trans Mountain, the City of Burnaby and the attorneys general of Alberta, British Columbia and Saskatchewan.

The oral hearing is scheduled for two days. On Wednesday, November 29, 2017 the National Energy Board will question Trans Mountain and the City of Burnaby. On Monday, December 4, 2017 Trans Mountain, Burnaby and the three participating attorneys general will provide oral argument. The hearing will be broadcast via a live audio feed on the NEB’s website at www.neb-one.gc.ca/TransMountainExpansion and transcripts will also be posted online.

Media accreditation is required for all journalists who wish to attend the hearing in-person. Media must be able to present government issued photo ID along with a business card and/or a letter requesting accreditation on official letterhead of a media organization, signed by the Publisher, Editor-in-chief, or Assignment Editor (along with their contact information). More information on media accreditation is available on the NEB website. Please note that no video or photography will be permitted during the hearing.

The National Energy Board is an independent federal regulator of several parts of Canada’s energy industry. It regulates pipelines, energy development and trade in the public interest with safety as its primary concern.

Quick Facts

The Federal Government approved the Trans Mountain Expansion Project last November, following a NEB recommendation in May 2016 that the project be approved subject to 157 conditions.
As this motion included a notice of a constitutional question, in accordance with section 57 of the Federal Courts Act, it was served on the Attorney General of Canada and all provincial attorneys general. The attorneys general of Alberta, British Columbia and Saskatchewan indicated that they wished to participate in the hearing.

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November 29, 2017