CANADA ECONOMICS

NAFTA

Global Affairs Canada. November 21, 2017. Trilateral Statement on the Conclusion of the Fifth Round of NAFTA Negotiations

Ottawa, Ontario - Today in Mexico City, the negotiating teams of Mexico, Canada and the United States concluded the fifth round of the renegotiation and modernization of the North American Free Trade Agreement (NAFTA), gathering nearly 30 negotiating groups.

In response to ministerial instructions at the end of the fourth round, chief negotiators concentrated on making progress with the aim of narrowing gaps and finding solutions. As a result, progress was made in a number of chapters.

Chief negotiators reaffirmed their commitment to moving forward in all areas of the negotiations, in order to conclude negotiations as soon as possible. Ministers have agreed to hold the sixth round of negotiations from January 23 to 28, 2018, in Montréal, Canada. In the meantime, negotiators will continue their work in intersessional meetings in Washington, D.C., through mid-December and will report back to chief negotiators on the progress achieved.

The Globe and Mail. 22 Nov 2017. Canada warns U.S. about auto tweaks. Representatives in Mexico City say Trump administration’s NAFTA rules-of-origin proposals would be self-defeating and cost jobs
STEVEN CHASE
GREG KEENAN

The Canadian government used NAFTA talks on Tuesday to warn the Trump administration that Washington’s bid to rewrite the deal’s automotive section in favour of the United States would backfire and cost Americans jobs and profits.
In Mexico City, where the fifth round of North America free-trade agreement negotiations wrapped up on Tuesday, the Canadian team made a presentation outlining how destructive and self-defeating it believes the rules-of-origin proposals would be.
Sources familiar with the talks outlined the conversation taking place behind closed doors.
The Canadians cautioned their U.S. counterparts that the Detroit Three auto makers – General Motors, Ford and Fiat Chrysler – would suffer the most damage if these American demands were adopted, sources familiar with the negotiations said. This is because the changes would drive up the cost of making vehicles in the United States.
Canada told the Americans it estimated the United States would lose 21,000 jobs as the increased costs of manufacturing reduced exports outside the NAFTA zone by 1.4 million autos a year – equivalent to the annual output of five or six plants.
The Canadian presentation said these proposals would ultimately encourage automotive interests to move manufacturing outside North America and end up benefiting offshore auto makers – including those in South Korea, Europe and Japan – which would build vehicles abroad and then pay tariffs to sell into the U.S., Canadian and Mexican markets.
Last month, U.S. negotiators laid down stringent demands for the automotive portion of a new NAFTA – proposals that have since been opposed by auto makers and parts suppliers and rejected by Canada and Mexico as unworkable.
Washington said it wants to rewrite the deal so that vehicles manufactured in North American could only qualify for duty-free access to the American market if they contain at least 50-per-cent U.S. content and 85per-cent North American content.
Foreign Affairs Minister Chrystia Freeland said the Trudeau government is pushing for Washington to address the likelihood, supported by fact-based research, that the auto rule changes would have the opposite effect of what the United States intends.
“We have heard from the auto sector – not only in Canada but also in the United States – that some of the proposals … would not only be harmful for Canada but would be harmful for the U.S. as well,” she told reporters in Ottawa on Tuesday.
Ms. Freeland said it’s now up to the Americans to address the data presented by Canada. “Do you agree with our facts or do you disagree with our facts? … These are facts we’ve gained from working very hard with industry on both sides of the border. It’s that fact-based approach that we’ve really been pushing.”
Sources familiar with the NAFTA negotiations said the Canadians prefaced their presentation in Mexico City by noting how healthy the U.S. auto sector appears today.
The Canadians observed that employment has climbed about 6 per cent on a year-over-year basis during the past decade and that investment in U.S. auto plants totalled $9.5-billion (U.S.) in 2017, creating or retaining more than 12,000 jobs. In 2016, the auto sector invested $8-billion in U.S. plants and $20-billion in research and development.
Their message? This is not an industry that is facing hard times, but instead one where production, employment and research has been climbing.
The U.S. proposal to boost the minimum required American content and minimum North American content would amount to heavy-handed intervention in what appears to be a healthy private sector, the Canadians told the Americans.
The more stringent auto-content rules would amount to dictating where suppliers should be located and represent an interference in decisions currently made by private investment, making geographical location the leading factor to consider when picking sources for parts, the Canadians said.
This would force companies to break existing supply chains and replace them with parts that otherwise wouldn’t be top choices when factors such as cost, quality and innovation are weighed.
The strict content rules urged by the Americans could also result in a situation where auto parts that move back and forth across the Canada-U.S. border during manufacturing would be hit with levies several times, boosting their ultimate price tag, the Canadian team warned.
One potential outcome would be that auto makers lose money on their operations in Canada and Mexico or shift them to the United States, which would require tens of billions of dollars in additional capital spending. That would result in the the cost of vehicles rising in the United States as the companies seek to recoup losses or the costs of shifting production, one source said.
These rising costs would dampen vehicle production in the United States and represent a boon for offshore suppliers such as South Korea, which already has preferential access to the United States and Canadian markets through free-trade deals.
One senior Canadian industry official said the U.S. positions on the three-party trade deal are so unreasonable that his thoughts are already turning to whether Canada can negotiate a return to the Canada-U.S. free trade agreement or a new bilateral deal.
Flavio Volpe, president of the Auto Parts Manufacturers’ Association, said U.S. trade officials were complaining in Mexico City earlier this week that Canada was not offering a counterproposal to the automotive demands the Americans placed on the table last month. The Americans had characterized that demand as “‘take it or leave it’ and it was an extreme position,” Mr. Volpe said.
The sixth of NAFTA negotiations will take place Jan. 23-28, 2018, in Montreal.
Ms. Freeland repeated Tuesday that Canada is developing contingency plans should NAFTA talks fail. U.S. President Donald Trump has threatened to tear up the deal if he can’t get it rewritten to tilt the agreement more in favour of U.S. workers.
“Our approach is to hope for the best and prepare for the worst and Canada certainly is prepared for every eventuality,” Ms. Freeland said.

REUTERS. NOVEMBER 21, 2017. NAFTA talks hit wall as Mexico, Canada push back on U.S. demands
Anthony Esposito, Adriana Barrera

MEXICO CITY (Reuters) - The United States, Mexico and Canada failed to resolve any major differences in a fifth round of talks to rework the NAFTA trade deal, drawing a swift complaint from the Trump administration on Tuesday that the lack of progress could doom the process.

The three nations have vowed to continue talks on the North American Free Trade Agreement (NAFTA) through March, but the yawning disagreements on core U.S. demands are piling pressure on negotiators to come up with fixes before Mexico’s 2018 presidential campaign begins in the spring.

Much friction centered on Mexican and Canadian rejection of a U.S. proposal to raise the minimum threshold for autos to 85 percent North American content from 62.5 percent as well as to require half of vehicle content to be from the United States.

The two have also resisted a range of other U.S. demands, including a plan to scrap a key dispute resolution mechanism and proposed curbs on Mexican and Canadian agriculture.

Minutes after the three countries issued a short joint statement underlining advances and vowing to continue work on concluding negotiations “as soon as possible,” U.S. Trade Representative Robert Lighthizer struck a different tone.

“While we have made progress on some of our efforts to modernize NAFTA, I remain concerned about the lack of headway,” he said in a statement. “Thus far, we have seen no evidence that Canada or Mexico are willing to seriously engage on provisions that will lead to a rebalanced agreement. Absent rebalancing, we will not reach a satisfactory result,” Lighthizer added.

Lighthizer and his Mexican and Canadian counterparts stayed away from the talks in Mexico City, where the mood was calmer than in the previous round last month in Washington.

Mexican Economy Minister Ildefonso Guajardo said that his government was ready to address Lighthizer’s concerns but by boosting commerce in the region, not restricting it.

“We’re prepared to work towards that (rebalancing) goal, provided it doesn’t limit Mexico’s ability to produce and export,” he told reporters in Mexico City on Tuesday evening.

He added that Mexico would make a counterproposal to the U.S. auto content demand once it had understood it

Negotiators said advances were made in agreeing on of the technical detail that forms the bedrock of the accord. But time is running out if they want to reach a deal by the end of March.

The negotiating teams are due to meet again in Washington in December before a sixth formal round of negotiations is scheduled for Montreal, Canada from Jan. 23-28.

THREATS

A U.S. official said wording had been agreed upon for anti-corruption, telecommunications, goods market access, sanitary and food safety measures and technical barriers to trade with spaces left for disputed sections.

“I think there’s a lot of gelling going on, rather than a lot of closing, so I think there’s a good argument that we are on schedule, that meeting our deadline of an agreement by March is not out of the question,” the official said, speaking on condition of anonymity due to the sensitivity of the talks.

U.S. President Donald Trump has threatened to withdraw from NAFTA unless he can rework it in favor of the United States, arguing that the pact has hollowed out U.S. manufacturing and caused a trade deficit of over $60 billion with Mexico.

The U.S. official expressed frustration that Mexico and Canada were not engaging in talks on the auto content proposal and others aimed at “rebalancing” trade in the region.

“If you make a proposal and the other side doesn’t respond, what is it you’re doing?,” the official said.

The U.S. auto proposal is a central plank of Trump’s America First strategy to boost U.S. manufacturing, but it faces stiff resistance from the auto industry, which worries it will make North American carmakers less competitive and costlier.

Mexican and Canadian officials said they wanted the United States to explain how the auto plan could prosper.

“Where is the merit in making a counterproposal to a demand that would take us backwards?” said a Canadian source.

The U.S. official did noted that Mexico had put forward a counterproposal to a U.S. plan to restrict access for Mexican and Canadian firms to U.S. public contract tenders that sought to put U.S. firms in the same situation in Mexico.

“I think Mexico is being helpful in using a counterproposal to crystallize their views,” the official said.

Mexico also formally proposed that NAFTA allow for a review of the accord every five years, instead of terminating the deal automatically if it is not renegotiated, as the United States has demanded, three Mexican officials said.

Taking effect in 1994, NAFTA underpins much of the more than $1 trillion in annual trilateral trade, and Washington’s threats to walk away from the pact have spooked markets.

Mexican officials initially expressed hope that chapters such as telecoms and e-commerce could be closed during the round. But chief Mexican negotiator Ken Smith told reporters that none would wrap up this time.

Additional reporting by David Lawder, David Ljunggren and Dave Graham; Editing by Cynthia Osterman

BLOOMBERG. 21 November 2017. Trump’s Hopes for Quick Nafta Deal Are Dimming
By Josh Wingrove , Andrew Mayeda , and Eric Martin

• No breakthrough on contentious files like autos, sunset clause
• U.S. Trade Representative warns of ‘lack of headway’’in talks

After three months of talks, the U.S., Canada and Mexico remain miles apart on a deal to update the region’s flagship trade pact.

The Nafta round ended Tuesday in Mexico City with negotiators failing to finalize new agreements on even minor sections of the pact. In some of his bluntest remarks since the talks began, U.S. Trade Representative Robert Lighthizer said Canada and Mexico aren’t “seriously” engaging on some key areas to overhaul Nafta. He made clear the U.S. won’t accept a deal that doesn’t shift trade flows in the U.S.’s favor.

“While we have made progress on some of our efforts to modernize Nafta, I remain concerned about the lack of headway,” he said in a statement on Tuesday. “Absent re-balancing, we will not reach a satisfactory result.”

A heavy workload lies ahead to resolve differences over hard-line U.S. proposals shot down by Mexico and Canada in talks scheduled through March.

“They really need to be much further along than this, and I’m concerned that this negotiation is on the verge of stalling out,” said Phil English, a former Republican congressman who’s now a senior adviser at law firm Arent Fox in Washington. He expected U.S. negotiators to have moderated proposals to a “sweet spot” by now. “I’m very concerned that this growing inertia on the big issues is creating an environment that will lead to bad results.”

The trio of political leaders at the helm of talks skipped this round, lowering expectations for major developments. They also aren’t expected to attend smaller sessions between now and the sixth full round scheduled for Jan. 23-28 in Montreal.

Unresolved Issues

A U.S. government official, speaking on condition of anonymity in Mexico City, said they didn’t consider it a setback that no new chapters were closed this round and said it’s still possible to reach a deal by March. The official criticized Canada and Mexico for not presenting counter-proposals on several issues those countries consider to be non-starters, in the latest sign of frustration.

“Chief negotiators reaffirmed their commitment to moving forward in all areas of the negotiations, in order to conclude negotiations as soon as possible,” the countries said in a joint statement.

A list of revised U.S. negotiating objectives published Friday hinted at wiggle room, seeking “periodic” review of the pact, something Canada and Mexico could probably live with. Privately, the U.S. is still pushing for a full sunset clause that would terminate the pact after five years unless the parties agree to extend it.

There was virtually no movement on the U.S. proposals on autos, dairy and scrapping dispute panels -- all highly opposed by Canada and Mexico. There also wasn’t progress on government contracts -- Mexico gave its own tit-for-tat proposal to cap access to its procurement projects after the U.S. proposed something similar. The U.S. official said Mexico’s suggestion didn’t move the dial much.

Mexico plans to put together a counter-offer to the U.S. cars proposal but first needed to try to understand the technical details and reasoning behind the American plan, which it did in this round, Economy Minister Ildefonso Guajardo told reporters Tuesday night. The current proposal from the U.S. appears impractical and inefficient for the industry, he added. Mexico is open to helping the U.S. achieve its goal of re-balancing trade, as long as it’s through an expansion of exports and not limitations on trade, Guajardo said.

"It’s a negotiation with a high degree of complexity, but we’re working through it, and at some point we will find spaces for a landing that serves everyone," Guajardo said.

Guajardo said that negotiators have made significant progress on topics including digital commerce, food safety measures and the environment, and that work on some of these issues could be concluded at any time, including between official negotiating rounds. Much of the technical work has been done, and wrapping up topics requires the political will of the three nations, he said.

’Cannot Agree’

Canadian officials warned this round that there will be no Nafta deal if the U.S. doesn’t back down on some issues.

“Significant differences remain on some key areas,” Canadian Foreign Minister Chrystia Freeland told reporters in Ottawa. She cited progress on the topics of telecom, digital trade and sanitary rules and said she expects a “positive outcome.”

“There are some areas where more extreme proposals have been put forward, and these are proposals that we simply cannot agree to,” she said, citing the autos proposal and later criticizing the sunset clause. “I’ve been married for 19 years. When my husband asked me to marry him, he didn’t say every five years we’re going to check whether we want to get divorced or not. I don’t think that is really a good foundation for a lasting relationship.”

Two-on-One

Much of the talks have pitted the U.S. against the other two. “Canada and Mexico are working very closely together,” Canada’s lead negotiator, Steve Verheul, said Monday. “We have a lot of issues in common.” Verheul warned U.S. stakeholders to speak up to salvage the deal. The U.S. Chamber of Commerce is doing that while Congress is growing more vocal, too.

Looming over the talks are Trump’s repeated threat to withdraw from the pact if he doesn’t like the new terms. Any country can leave after giving six months’ notice.

Scotiabank Deputy Chief Economist Brett House said Tuesday the U.S. positions detailed in Mexico made a March deal less likely -- but that doesn’t “increase in any way the likelihood that Nafta is scrapped.”

He sees ample gray area: Trump could give notice of withdrawal and not follow through, or could try to withdraw and meet resistance from Congress. House sees a 20 percent chance of a deal by March, “and a much higher likelihood of them muddling through a zombie-like period for the rest of the year and into 2019.”

— With assistance by Greg Quinn

TPP

BLOOMBERG. 22 November 2017. Canadian CEOs Urge Trudeau to Back Pacific Rim Trade Pact
By Josh Wingrove

• Prime minister seeks changes that are holding up TPP deal
• Japan pushing for quick implementation of pact Trump quit

Canadian chief executives are calling on Prime Minister Justin Trudeau to nail down and implement an 11-nation Pacific Rim trade deal, as Canada holds out in hopes of changes.

The Business Council of Canada, representing chief executives from many of the country’s biggest firms, said the latest version of the Trans Pacific Partnership would be immensely beneficial and is imperiled by any delay. The TPP controversy comes as talks toward a revised North American Free Trade Agreement stall on contentious U.S. demands.

“Now more than ever, Canada should be doing everything possible to diversify its trade,” said John Manley, chief executive of the group, said in a statement concluding a visit to Japan, the largest economy in the proposed pact. The pacific deal “would be a game-changer for Canadian companies in key markets in the Americas and across the Pacific.”

The group’s chair, Linamar Corp. Chief Executive Officer Linda Hasenfratz, also called on Trudeau to finalize the deal. Linamar is a major auto parts maker, and Hasenfratz sits on the Canadian government’s advisory council for Nafta talks.

Seeking Changes

The fate of the Pacific trade deal, which was rebranded as the Comprehensive and Progressive Trans-Pacific Partnership, remains in doubt as Canada -- the second-largest economy in the pact -- pushes for changes while Japan calls for a quick agreement.

A meeting in Vietnam of leaders of the 11 CPTPP nations was canceled this month when Trudeau didn’t show up, an absence the Canadians said was due to a lengthy meeting with Japanese Prime Minister Shinzo Abe. The nations are seeking a way forward after U.S. President Donald Trump pulled his country out of the deal.

Trudeau has said the country won’t be rushed into a deal, which was agreed to initially by his predecessor. A Japanese newspaper report this week suggested the other countries might proceed without Canada.

AVIATION

The Globe and Mail. 22 Nov 2017. Article. Site C might be past the point of no return
GARY MASON

When Newfoundland and Labrador Premier Dwight Ball announced the parameters of a judicial inquiry into the problemplagued Muskrat Falls hydro-electric project this week, it wasn’t difficult imagining a similar autopsy being performed on a similar venture on the other side of the country some day down the road.
B.C.’s NDP government will soon have to make a decision on the fate of the province’s own hydro-electric dam, so-called Site C, a highly contentious mega project initiated by the previous Liberal regime. Opponents – of which there are many – were thrilled when the NDP dethroned the incumbent Liberals in the spring election, so convinced were they the new guys were intent on driving a stake through it.
The reasons for stopping the endeavour in its early stages were compelling: projections suggesting the electricity generated wouldn’t be needed for decades; cheaper alternatives such as wind, solar and geothermal; lack of due process by the previous government in initiating the undertaking; and, finally, the escalating cost. Originally estimated to bill out at $6.6-billion, the latest quote stands at nearly $9-billion, with knowledgeable people predicting it will reach $12-billion or more before all is said and done.
In other words, it has Muskrat Falls written all over it.
While it certainly looked as if the NDP was intent on cancelling Site C – particularly given its governing partnership with the Green Party, which vehemently opposes its construction – the picture is much less certain today. With a final decision expected before year’s end, the government has been given a lot more to consider in recent days.
Shortly after taking office, the NDP asked the independent B.C. Utilities Commission to prepare a quickie report on the efficacy of the project – something the Liberals refused to do. While not coming out with a firm recommendation, the BCUC panel raised serious doubts about the project’s economics, saying it was near impossible to justify its outlay against forecast demand and cheaper alternatives. But recently, other experts with ties to the government have questioned many of the BCUC’s assumptions, particularly as they relate to the province’s energy needs in the coming decades.
The BCUC panel had indicated those requirements weren’t nearly as great as BC Hydro, the Crown utility in charge of the project, have indicated they would be. But in the past week, the BCUC’s own forecasts were challenged, with experts saying the commission panel completely underestimated the energy needs created by the growing electrification of the economy. It was also pointed out that the cost of cancelling the project at this point will be in the neighbourhood of $4-billion. Tack on to that, too, the need to raise consumer electricity rates to pay for the decision. Also, Hydro would then have to start from scratch to find alternative, cheaper energy sources.
In other words, it’s too late to turn back.
Whatever Premier John Horgan and his cabinet decides, it will be incredibly divisive, not just in the province but inside his own party. If the result is to go ahead, it will anger the NDP’s vocal and activist environmental wing, which exists in the party more broadly, but also inside the government caucus. A green light could also jeopardize what so far has been a fairly contented working relationship with the Greens.
A decision to kill it will anger the NDP’s labour flank, which has deserted the party in past elections over concerns it didn’t care about rural parts of the province and the bluecollar sorts who rely on projects such as Site C for their livelihood.
Mr. Horgan’s own working-class heart is unquestionably with the families that rely on big construction jobs to earn a living. But his head is likely telling him the project will come back to haunt the party if it goes ahead.
The NDP waited 16 long years to return to government and make the kind of big, tough decisions that Site C represents. They are also choices that begin to consume, sometimes ferociously, the well of political capital a government has stored up at the beginning of its mandate. As many administrations in this country have discovered, it sometimes doesn’t take long to use it all up.
Which way will the government go? I’m not sure. But early in 2017, when she was still premier, Christy Clark said she hoped to get the project “past the point of no return.” In the end, she may have accomplished her goal. And Site C could be her most noteworthy legacy, for better or worse.

ENERGY

The Globe and Mail. 22 Nov 2017. Keystone outage hits Canadian crude prices. Keystone: Opponents have vowed to fight the project
JEFF LEWIS, CALGARY

Oil sands producers are facing renewed price weakness even as the industry basks in the afterglow of a major pipeline approval.
TransCanada Corp.’s proposed Keystone XL cleared a big hurdle this week after Nebraska regulators narrowly approved the $8-billion (U.S.) project, bringing the industry one step closer to forging a long-sought link with refineries on the U.S. Gulf Coast.
But the good news for hard-hit Alberta producers has been largely overshadowed with opponents vowing to appeal the decision and prices for oil sands-derived crude sinking to fresh lows.
Prices for Western Canadian Select (WCS), a blend of heavy crude and bitumen from the oil sands, have been hit by an outage on TransCanada’s original Keystone line, a key artery that carries about 590,000 barrels a day of oil from Hardisty, Alta., to markets in the U.S. Midwest.
The line was shut last week following a 5,000-barrel spill in South Dakota, and the company has not indicated when it will restart. Adding to pressure, Enbridge Inc. has also rationed space on its Line 67 heavy-oil conduit for the month of December.
A trade industry source said the move was due to a combination of high demand and maintenance on the line, but analysts also view such restrictions as a harbinger of future constraints.
This year, WCS has traded in a narrow band to U.S. crude, signalling there’s enough room to move barrels on existing pipelines, said Judith Dwarkin, chief economist at RS Energy Group in Calgary. That could change as rising oil sands production tests the limits of current export capacity.
“In the longer term, there will be a need for new incremental pipeline capacity to accommodate the growth that’s expected,” she said by phone. “There’s no question.”
WCS barrels for January delivery on Tuesday fetched about $16.10 less than U.S. benchmark West Texas intermediate oil, broker Net Energy Inc. said, against a discount of around $14.20 last week.
U.S. crude settled Tuesday at $56.83 a barrel, implying a value of roughly $52.07 (Canadian) for the heavy oil, based on the current exchange rate.
Canadian heavy crude trades at a discount to the headline North American price because it requires more processing and refining equipment to turn it into transportation fuels such as gasoline and diesel.
The price gap, known as the differential, fluctuates for a variety of reasons that also include supply gluts or disruptions to overall demand. In 2013, for example, the spread mushroomed to more than $40 (U.S.) a barrel.
Producers have invested heavily in terminals to ship production by train, making such deep discounts unlikely today. However, some of the current weakness is more structural, driven by fast-rising output and maintenance finishing at existing plants, said Mark Oberstoetter at consultancy Wood Mackenzie.
Suncor Energy Inc., Canadian Natural Resources Ltd. and others have sunk billions of dollars into expansions through the downturn, with much of the spending committed before crude prices crashed.
Those barrels are poised to hit a market that’s increasingly swollen with supplies, effectively making the industry more vulnerable to sudden pipeline or refinery outages, Mr. Oberstoetter said. Meanwhile, the fate of projects such as Keystone XL remain uncertain.
TransCanada has said it is studying the Nebraska approval, which okayed an alternative to the company’s preferred route through the state. Opponents have vowed to fight the 830,000-barrel-a-day project, raising the spectre of additional delays and costs.
Rival Kinder Morgan Canada Ltd.’s proposed Trans Mountain expansion through British Columbia has already been pushed back by at least nine months, meaning crude won’t flow until late 2020 at the earliest.
“You’re finally seeing that looming scenario we’ve been talking about, where supply is filling up that pipeline capacity,” Mr. Oberstoetter said.
“Any disruptions to the pipeline system will definitely drive a spike to [the WCS differential], given it’s more sensitive and there’s less leeway.”
TransCanada (TRP) Close: $64.25, up 74¢

REUTERS. NOVEMBER 21, 2017. TransCanada to cut Keystone crude deliveries through month-end: sources

(Reuters) - TransCanada Corp has told some customers that it will cut deliveries by 85 percent or more on its 590,000-barrel-per-day Keystone crude pipeline through to the end of November, according to three sources familiar with the matter.

The line, which links Alberta’s oil sands to U.S. refineries, was shut last week after a 5,000-barrel spill in South Dakota.

Some customers have received higher cuts depending on commitment levels, one of the sources said.

A company official could not immediately be reached for comment.

Transcanada in an earlier statement said that over 160 workers were on the site of the spill and more than 16,000 gallons had been removed as of Nov. 21.

“Repair plans will be confirmed once we are able to safely expose the impacted section of pipe,” the company said.

The prompt WTI spread was trading up 4 cents at 10.22 p.m. EST, the first time it’s been in positive territory since November, 2014, with traders citing expectations of larger draws from Cushing, Oklahoma, the delivery point of the U.S. crude futures contract.

The Keystone pipeline carries crude into Cushing.

Reporting by Catherine Ngai in New York, writing by Vijaykumar Vedala; Editing by Grant McCool and Joseph Radford

FINANCE

StatCan. 2017-11-22. Consolidated Canadian Government Finance Statistics, 2016

Federal government expenses bring the net operating balance of Canadian General Government down

The deficit of the Canadian General Government (CGG)—federal, provincial-territorial and local governments combined—in their consolidated net operating balance totalled $18.1 billion in 2016, following a $12.9 billion deficit in 2015. This increase was largely attributable to expenses (+2.6%) outpacing revenues (+1.9%).

The net operating balance, also referred to as surplus or deficit, is calculated as revenues minus expenses over a reference period and constitutes a summary measure of the sustainability of governments operations.

The net operating balance deficit for the federal government totalled $10.0 billion in 2016, compared with a $2.1 billion surplus the previous year. Total federal expenses grew 4.2%, due to an increase in social benefits (old age and family allowances) and grants to provinces and territories expenses, while revenue edged down 0.1%.

On the other hand, consolidated provincial-territorial and local governments (PTLG) posted an $8.0 billion deficit in their net operating balance in 2016, following a $15.0 billion deficit in 2015. The increase in PTLG revenue (+3.6%) in outpaced the growth in expenses (+2.1%).

Net operating balances in deficit were reported in 9 of 13 jurisdictions. Alberta (-$9.9 billion), Manitoba and Ontario (each -$1.7 billion) had the largest deficits in 2016.

Saskatchewan and Alberta experienced the largest drop in net operating balance in 2016. While still in deficit, Ontario's net operating balance improved the most, due to higher corporate income taxes and taxes on goods and services.

The largest surpluses in net operating balances in 2016 were recorded in British Columbia (+$4.9 billion) and Quebec (+$4.4 billion).

Chart 1: Net operating balance, Canadian General Government and provincial–territorial and local governments, 2015 and 2016

Fiscal burden increases in most provincial-territorial and local governments

In 2016, CGG reported consolidated revenues of $728.6 billion, with taxes and social contributions accounting for 83.7% of total revenue. The remainder includes revenue from sales of goods and services, interest and dividends and other sources.

PTLG consolidated revenues totalled $529.3 billion in 2016, with taxes ($323.5 billion) and social contributions ($13.6 billion) accounting for 63.7% of the overall total.

The federal government, in turn, had $288.5 billion in total revenue in 2016, down slightly (-0.1%) from 2015. The increases in total revenue from taxes (+1.3%) were more than offset by lower social contributions (-2.6%) and other revenue (-18.1%), mainly dividends from government business enterprises and voluntary transfers other than grants.

Measured in nominal dollars, and on a per capita basis, the CGG fiscal burden—tax revenues and social contributions imposed by governments on individuals, businesses and non-residents—increased from $16,617 in 2015 to $16,827 in 2016.

The PTLG fiscal burden per capita rose in eight provinces, with Newfoundland and Labrador (+$1,075) and British Columbia (+$604) recording the largest increases. Declining tax revenues resulted in a lower fiscal burden in Saskatchewan (-$639) and Alberta (-$121).

Largest increase in federal grant revenue since 2009

In 2016, $84.3 billion of Canada's PTLG consolidated revenues came from grants, up 5.4% from $80.0 billion in 2015. This was the largest increase since 2009 (+16.8%), when Canada's Economic Action Plan was launched following the global recession.

PTLG grants are transfers received from the federal government, including the Canada Health Transfer, Canada Social Transfer, equalization payments, and other current and capital grants.

Among the provinces, Prince Edward Island received the most grants per capita ($4,723) followed by New Brunswick ($4,143), while British Columbia ($1,728) recorded the least.

PTLG in the territories are highly dependent on federal funding, where it represents on average 74.4% of revenues, compared with 15.3% in the provinces in 2016.

The ratio of interest expense to revenue decreases for Canadian General Government

The CGG paid 7.9 cents in interest for every dollar of revenue in 2016, which represents $57.4 billion in interest expense. This ratio was down compared with 2015, when it stood at 8.2 cents.

The ratio of interest expense to revenue provides a measurement of the public debt burden. The more interest a government has to pay to service debt, the fewer funds it has at its disposal to administer government and deliver services.

In 2016, PTLG interest expenses totalled $35.6 billion, up slightly from $35.1 billion in 2015.

Among the provinces in 2016, Newfoundland and Labrador (at 10.1 cents compared with 10.9 cents in 2015) and Quebec (at 10.2 cents, down from 10.4 cents in 2015) continue to have the highest PTLG interest expense to revenue ratio.

Alberta (at 1.6 cents, up slightly from 1.5 cents in 2015) had the lowest interest expense to revenue ratio followed by Saskatchewan (at 3.8 cents, up slightly from 3.6 cents in 2015).

The federal government paid 7.6 cents in interest for every dollar of revenue in 2016, compared with 8.2 cents in 2015. Since revenues decreased slightly and the stock of interest bearing debt increased in 2016, this decline in the federal government can be traced to lower average effective interest rates.

Environmental protection expenses rise

The presentation of expenses according to the Canadian Classification of Functions of Government provides an important picture of the role governments play in delivering services such as health, education, social protection and public order and safety to citizens.

In 2016, combined expenses on health (24.7%) and social protection (24.7%) accounted for about half of total CGG expenses. CGG expenses in general public services (15.4%), education (13.7%), economic affairs (8.2%) and public order and safety (5.1%) followed.

Health expenses represented the largest share of total expenses in all PTLG. Among the provinces, Nova Scotia (38.7%) spent the most, and Saskatchewan (31.2%) the least.

Education was the next largest category for most provincial PTLGs, with Saskatchewan (21.4%) spending the most and Quebec (15.0%) the least.

Environmental protection expenses in Alberta PTLG totalled $2.5 billion in 2016, up 71.6% from 2015. The increase was due to subsidies made in accordance with the Climate Leadership Plan in the province.

As a result, environmental protection expenses saw the largest growth (+15.3%) for PTLG at the Canada level in 2016.

While still negative, Canadian General Government's net financial worth increases

Growth in CGG's financial assets (+6.9%) outpaced liabilities (+2.5%) in 2016, improving the net financial worth (-$1,156.4 billion) by $13.1 billion compared with the level in 2015.

CGG held $1,009.8 billion in financial assets, up from $944.6 billion in 2015, mostly in the form of equity, loans to government business enterprises and accounts receivable. In turn, the CGG had $2,166.2 billion in liabilities, mostly in the form of debt securities, pension liabilities and accounts payable.

Alberta, Yukon and Nunavut PTLG recorded a net financial asset position in 2016, while all other jurisdictions were in a net liability position. Net liabilities on a per capita basis were highest in Quebec ($21,639), followed by Ontario ($20,045) and Manitoba ($18,006).

While still negative, net financial worth rose in most PTLG, with the largest increase reported in Quebec (+$8.6 billion), followed by British Columbia (+$5.2 billion) and Ontario (+$4.5 billion).

Net financial worth decreased the most in Alberta (-$10.5 billion), followed by Saskatchewan (-$1.9 billion), Manitoba (-$1.4 billion) and Newfoundland and Labrador (-$1.3 billion).

Chart 2: Net financial worth per capita, Canadian General Government and provincial–territorial and local governments, 2016

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/171122/dq171122a-eng.pdf

Canada Revenue Agency. November 21, 2017. Statement from the Minister of National Revenue on the 2017 Fall Reports of the Auditor General of Canada. Statements

Ottawa, Ontario – The Honourable Diane Lebouthillier, Minister of National Revenue, delivered the following statement in response to the report called “Call Centres—Canada Revenue Agency” in the 2017 Fall Reports of the Auditor General of Canada:

“I thank the Auditor General and his staff for their work and dedication to improving services for Canadians.

As the Minister of National Revenue, one of my priorities is to ensure that the Canada Revenue Agency offers quality service and treats Canadians as valued clients, not just as taxpayers. I acknowledge the report findings and agree with the Auditor General’s recommendations.

For millions of Canadians, our call centres are their first choice to interact with the Agency. Our clients have a right to receive information that is clear and precise, when they need it. We have made strides to improve our service over the last two years by hiring more agents, increasing self-serve options, and implementing measures that will allow our clients to reach our agents more readily. However, there remains work to be done, and the Auditor General’s recommendations will help us make the necessary adjustments.

To this end, we have launched a three-point action plan to modernize CRA call centres, which focuses on technology, training our agents, and updating our service standards.

Beginning in 2018, our clients will see numerous improvements when we implement a new telephone platform in our call centres. This platform will connect Canadians with agents more efficiently and will inform callers of current wait times. Additionally, a new national quality control team will be put in place to improve agent tools and training. Finally, we will update our service standards to provide Canadians with clearer and more transparent information about the service they can expect from our call centres.

Budget 2016 invested more than $50 million over four years to improve the CRA’s call centre service, for which funding had been reduced considerably over the years. This investment was necessary and will improve the quality of the service we offer Canadians, who remain at the heart of our decisions and actions.”

The report covers the period April 1, 2012, to March 31, 2017.

________________

LGCJ.: