CANADA ECONOMICS

NAFTA

The Globe and Mail. 17 Nov 2017. Canada, Mexico forming alliance against U.S. protectionist approach to NAFTA
ADRIAN MORROW

Canada and Mexico are working together behind the scenes to present a united front against U.S. President Donald Trump’s protectionist NAFTA demands and control the tenor of the trade talks.
The two sides hold regular backchannel discussions – from Foreign Affairs Minister Chrystia Freeland and Mexican Economy Secretary Ildefonso Guajardo down to staffers from the respective governments – to compare notes on the U.S. positions and keep one another up to speed on their respective strategies, sources with knowledge of the communications said.
As the fifth round of the renegotiation of the North American freetrade agreement (NAFTA) opens this week in the tony Polanco area of Mexico City, the pact’s junior partners have never been more aligned: They plan to hold firm against U.S. demands on autos, procurement and a sunset clause while seeking quick agreement on less contentious issues.
“My impression is that there has been a fair amount of consultation and co-ordinated strategy developing between Canada and Mexico,” said Andres Rozental, a Mexican former deputy foreign minister, who has been following the talks. “And I think that’s positive.”
But Ottawa is playing something of a double game. Even as it extensively co-ordinates its efforts with Mexico City, sources with knowledge of the Canadian government’s thinking concede the country would agree to a two-way negotiation with the United States if NAFTA talks break down.
Under exactly which circumstances Canada would ditch Mexico are unclear.
One source insisted Canada would only contemplate a new bilateral deal with the United States if Washington completely pulled out of NAFTA and there was zero chance of a three-way pact. A different source, however, said Canada would consider bilateral talks if the NAFTA renegotiation reached a deadlock and the United States offered a two-way pact instead.
For now, however, Canada and Mexico are standing shoulder to shoulder.
Mexico plans to present a counterproposal to the U.S. demand for a sunset clause that would terminate NAFTA in five years unless all three countries agree to extend it. Under the Mexican plan, the five-year period would simply be a review with the option for the agreement to be updated. Mexico is also working on a counterproposal to Mr. Trump’s demands on rules of origin, which included mandating a 50-per-cent U.S. content requirement for all vehicles made in Mexico and Canada. The rules-of-origin issue is set for four days of talks, stretching from Saturday to Tuesday.
For the most part, however, the fifth round is set to focus largely on less contentious issues in a bid to make progress before tackling the most difficult sticking points. The countries’ respective point persons – Ms. Freeland, Mr. Guajardo and U.S. trade czar Robert Lighthizer – will not attend this time.
Financial services, customs procedures and investment are scheduled to get large chunks of time at these talks. Some controversial measures will be largely shunted off for future rounds: Dispute resolution is scheduled for just one day and procurement for two.
John Weekes, who was Canada’s chief negotiator in the original NAFTA talks in the early 1990s, said Canada and Mexico stand a better chance of resisting the U.S. onslaught if they co-operate.
“It would be perfectly natural to be sharing information about where the Americans are coming from, and what tactics might be useful to push back,” said Mr. Weekes, senior business adviser in Bennett Jones’s Ottawa office. “A united front makes for a better prospect of a successful negotiation.”
Mr. Weekes said he co-ordinated regularly during the original talks with his Mexican counterpart, Armenio Blanco, dining with him and several subordinates before every round. On one occasion, for instance, Mr. Weekes explained to Mexico the importance of getting a cultural carve-out in NAFTA – allowing Ottawa a free hand to protect cultural companies and enforce Canadian content requirements – and Mr. Blanco agreed not to intervene when Canada hashed the issue out with the United States.
“We wanted to make sure each understood where each other was coming from so we didn’t inadvertently do anything to get in the way of each other,” Mr. Weekes recalled.
Jaime Zabludovsky, a Mexican former trade negotiator who has been advising the government, said he believes Canada is sincere in its desire to keep Mexico in the pact. Not only have the three economies become so heavily integrated – with auto companies regularly manufacturing products between all three countries – but in Mr. Trump’s “America First world,” he argued Canada would face the same demands on rules of origin and dispute settlement if it negotiated alone.
“I don’t see why doing two bilateral negotiations would make anything easier,” he said. “The same obstacles in NAFTA would be there in a bilateral one.”
And Luis de la Calle, who helped negotiate the original NAFTA deal for the Mexican government, argued that Canada needs Mexico just as Mexico needs Canada: The prospects of getting any trade deal through the U.S. Congress are uncertain and he contended that an updated NAFTA stands a better chance of approval than two new, separate bilateral agreements.
Since the days he was at the table, when both Democrats and Republicans worked together to get NAFTA through, the political climate in the United States has shifted dramatically. “When you negotiated the original Canada-U.S. free-trade agreement in 1987, and then when we did NAFTA in 1993, there was a window of opportunity that allowed Canada and Mexico to reach deals with the United States,” he said. “That window of opportunity is now closed.”

The Globe and Mail.  17 Nov 2017. The resolution of the NAFTA dispute lies in the hands of U.S. legislators. Get ready for ‘zombie’ NAFTA and a lengthy fight in Congress
LAURA DAWSON, Director of the Wilson Center’s Canada Institute in Washington

As Canada heads into the fifth scheduled round of North America free-trade agreement talks on Friday, there is speculation that this will be the round when increasingly untenable demands from the United States will lead Canada to walk away from the talks.
True, Canada walked away from the free-trade negotiations with the United States in 1987. It did the same in 2016, in the negotiations with the European Union over Canada-European Union Comprehensive Economic and Trade Agreement (CETA). But both walkouts were predicated on two assumptions: First, that the negotiations could go no further at the bureaucratic level and would have to be elevated to the political level for resolution, and second, the credible belief that the other side wanted a deal.
In the current NAFTA 2.0 negotiations, Canada and Mexico are under no illusions that the U.S. negotiators will call them back with a compromise if they walk. It is quite possible that the negotiators from the Office of the United States Trade Representative (USTR), who are part of the Executive Office of the President, are under instructions to let the deal fail.
Mexico and Canada, and a substantial share of U.S. industry and agriculture, have a modernization agenda they are seeking to achieve through this negotiation. In roughly 20 of 24 NAFTA issue areas, productive negotiations are likely to continue, following a predictable model of offer and response, revise and compromise. These include small business, expansion of digital services and use of new technologies to facilitate customs clearance.
Market access commitments (i.e., tariffs) are another story, and the complexity of managing threecountry supply chains is one of the reasons for Canada’s limited agreement last week at the Trans-Pacific Partnership leaders summit.
The real sticking points are the four so-called “poison pills.” These include severe cuts to current levels of government procurement access; a sunset clause that would kill the deal on the basis of U.S. trade-deficit triggers; automotive rules of origin that no North American automotive company could currently meet; and a dispute settlement system that allows participants to opt out at will.
Former prime minister Stephen Harper suggests that Canada devise compromise proposals that meet the U.S. administration halfway on these deal-killing initiatives. But if the intention of these provisions is to sink the deal, a proposal that leaves the NAFTA “mostly dead” (to quote The Princess Bride’s Miracle Max) will not satisfy either anti-trade or pro-trade factions in the United States.
Instead, the negotiators should focus on reaching a provisional settlement on issues where there is common ground and leave the job of rescuing the deal from a hostile administration to the U.S. Congress, where it belongs. But leaders from the major trade committees – House Ways and Means and Senate Finance Committee – have yet to seriously engage on the trade file. Understandable when they are facing so many other legislative and governance challenges.
At present, there are enough protrade Republicans in Congress to preserve NAFTA but the balance of power may shift after the November 2018 midterm elections. More Trump Republicans or anti-trade Democrats could skew the consensus away from NAFTA. If so, protrade factions in the United States will have to rely on court actions to try to suspend or delay presidential actions to remove the United States from the agreement.
In terms of likely outcomes, the least likely outcome is the swift and successful completion of a modernized NAFTA. However, complete dissolution of the deal is also unlikely. (The Wall Street Journal puts the odds at one in four.) Most legal experts agree that it would be very difficult for U.S. President Donald Trump to fully remove the United States from NAFTA without the approval of Congress.
The more likely scenarios are that Mr. Trump launches a notice of withdrawal that is blocked for a couple of years by the legislative or judicial branch. Pro-trade organizations are already preparing to launch legal actions to halt or slow down a presidential action. At the legislative level, Congress, under the rules of Trade Promotion Authority, has the right to either accept or reject a finished deal. Thus, the main site of legislative influence takes place at the end of the negotiations. In the meantime, however, Congress can let the USTR know that it will not support a deal that disrupts supply chains, deflects foreign investment or provokes foreign retaliation.
The most likely short-term option is a zombie NAFTA that is neither alive nor dead while North American business waits for a presidential change of heart or a change of president. The zombie option is preferable to a completely dead NAFTA, but the economic effects of such instability are undeniably negative for all three countries.
It is not necessary to kill the deal to torpedo the U.S. economy. In a letter to Commerce Secretary Wilbur Ross, more than 80 U.S. agricultural groups said they were “sadly confident” that the initiation of withdrawal measures alone would trigger cancellation of commodity orders and product-specific retaliation.
It is not certain that the NAFTA will fail, but what is clear is that the resolution of the issue lies in the hands of U.S. legislators. Faced with this reality, Canadian negotiators should continue to work on the issues where they can make a difference, recognizing that once they the leave the table, influence over final outcomes moves out of Canadian control.

CIB

The Globe and Mail. 17 Nov 2017. Ten directors named to Canada Infrastructure Bank board
BILL CURRY, With files from Chris Hannay

The federal government has named 10 individuals to the board of the new Canada Infrastructure Bank, including some with Liberal connections.
The government noted that the appointments include an equal number of men and women and “reflect Canada’s linguistic, cultural, and regional diversity.”
The backgrounds of board members are primarily focused in areas of large infrastructure developments and investment management, particularly public pensions. The list includes James Cherry, the former president and chief executive of Aéroports de Montréal, who has previously advocated for airport privatization.
The federal Liberal government has contracted studies on the merits of fully privatizing Canada’s airports, but the issue has been the subject of extensive internal debate and no decisions have been announced.
The goal of the infrastructure bank is to attract large institutional investors – such as pension funds – to partner with the federal government in building new, revenue-generating infrastructure. Pension-fund executives have said they are more interested in purchasing infrastructure that has already been built – such as airports – but have expressed openness to working with the bank on new projects.
Legislation creating the bank faced scrutiny in Parliament earlier this year over whether or not its management would have enough independence from political decision makers.
Some of the board members announced on Thursday have connections to the Liberal Party. David Bronconnier, a former municipal politician who was mayor of Calgary from 2001 to 2010, ran for the federal Liberals in the 1997 federal election. He lost to the Reform Party’s Rob Anders in the riding of Calgary West.
Kim Baird, a former chief of B.C.’s Tsawwassen First Nation, has previously donated to the BC Liberals and is currently registered to lobby the federal government – including Infrastructure Canada – on behalf of the Huu-ay-aht First Nation. The lobbyist registry states that part of Ms. Baird’s work includes advocating for a natural gas project.
The BC Liberals tend to attract support from both federal Liberals and Conservatives. Ms. Baird also spoke at a 2014 town hall event organized by the Vancouver East federal Liberal riding association. Ms. Baird was the subject of controversy in 2016, when Prime Minister Justin Trudeau’s government named her to a threeperson panel to review the Kinder Morgan pipeline expansion. Critics said her lobbying work and past ties to Kinder Morgan Canada via an executive exchange program placed her in a conflict of interest.
Other board members announced on Thursday include Vancouver lawyer Jane Bird, who led the development and construction of the city’s Canada Line rapid-transit project; Michèle Colpron, an international finance executive who has previously held senior positions with the Caisse de dépôt et placement du Québec, as well as overseas banks as chief financial officer of both Merrill Lynch Bank (Suisse) SA and Standard Chartered Bank (Switzerland) SA; former public pension executive Bruno Guilmette, who managed infrastructure files for the federal Public Sector Pension Investment Board and the Caisse; Christopher Hickman, chairman and CEO of Marco Group of Companies; Osgoode Hall Law School professor Poonam Puri, who was recently voted as one of Canada’s top 25 lawyers and focuses on corporate governance and accountability issues; First National Financial LP chief executive officer Stephen Smith, who is also a former board member of Metrolinx; and former SaskPower president and CEO Patricia Youzwa.
Both Mr. Cherry and Mr. Hickman have made political contributions to both the Liberal Party and the Conservative Party.
The bank is not yet operational but Infrastructure Minister Amarjeet Sohi has said he expects to launch before the end of the year. The board is led by Janice Fukakusa, who was appointed in July.
The position of president and CEO has not yet been filled.

CIB. 2017-11-17. Members of the Canada Infrastructure Bank Board of Directors - Biographies



Janice Fukakusa, Chairperson, Canada Infrastructure Bank

Ms. Fukakusa is a corporate director and former Chief Administrative Officer and Chief Financial Officer of Royal Bank of Canada, from which she retired in January 2017 following a distinguished 31-year career.

Ms. Fukakusa currently serves on the boards of a number of corporate and not-for-profit organizations, including Cineplex, General Growth Properties, The Princess Margaret Cancer Foundation, and Wellspring Cancer Foundation. She serves as the Chair of the Board of Governors of Ryerson University.

In 2007, she was inducted into Canada's Most Powerful Women Hall of Fame and, in 2016 she was named one of the 25 Most Powerful Women in Banking by American Banker magazine for the fourth consecutive year. She was also selected as Canada's CFO of the Year by Financial Executives Canada, PwC and Robert Half in 2014.

Prior to joining RBC, Ms. Fukakusa worked at PricewaterhouseCoopers LLP where she obtained the professional designations of Chartered Professional Accountant and Chartered Business Valuator. She obtained a Bachelor of Arts from University of Toronto and holds a Master of Business Administration from Schulich School of Business.

Kimberly Baird

Ms. Baird is the founder of Kim Baird Strategic Consulting and former elected Chief and Strategic Initiatives Director of the self-governing Tsawwassen First Nation.

Ms. Baird currently serves on the boards of numerous organizations including the Smithsonian National Museum of the American Indian, the Public Policy Forum, the Clear Seas Centre for Responsible Marine Shipping and the Vancouver Board of Trade. She also served on the Board of BC Hydro for six years. Ms. Baird holds an ICD.D designation from the Institute of Corporate Directors.

In 2016, Ms. Baird was awarded the Order of British Columbia after being named a Member of the Order of Canada two years earlier. She is also a recipient of the Queen's Diamond Jubilee Medal, the Indspire Award, and, in 2008, was awarded Canada's Most Powerful Women: Top 100 Award.

Jane Bird

Ms. Bird is a Senior Business Advisor with the Vancouver office of Bennett Jones LLP, a large Canadian law firm where she provides advice to private and public sector clients on matters related to the development and execution of infrastructure projects.

Jane has been directly involved with large projects for more than 20 years, including the development and construction of the Canada Line rapid transit project in Vancouver, the construction of the Waneta hydroelectric generating station in southeastern BC and the redevelopment of Canada House in London, U.K. Jane serves on the boards of several Canadian companies.

Ms. Bird has received several awards; Canada's Most Powerful Women: Top 100 Award and the Vancouver Board of Trade Sprit of Vancouver Outstanding Leadership Award. Most recently, Jane received the 2017 National Outstanding Leader Award from the Women's Infrastructure Network.

Ms. Bird holds a Bachelor of Laws degree from Dalhousie University and an ICD.D designation from the Institute of Corporate Directors.

Dave Bronconnier

Mr. Bronconnier is the President and Chief Executive Officer of Interloq Capital Inc. and former Mayor of Calgary, where he served three consecutive terms between 2001 and 2010. Following his third term as Mayor, Mr. Bronconnier was appointed Alberta Envoy to the United States where he served between 2011 and 2012.

Over the course of his career Mr. Bronconnier has been awarded the Queen's Diamond Jubilee Medal, the Golden Jubilee Medal and the World Leadership Award for Environmental Excellence from the World Leadership Forum in London, UK. He was also made a Paul Harris Fellow by Rotary International and was twice-awarded the Distinguished Service Medal from the Canadian Military.

James Cherry

Mr. Cherry is the former President and CEO of Aéroports de Montréal and has served in numerous leadership positions within the Aerospace, Defence and Transportation sectors, including as President and Chief Operating Officer of Alstom Transport and of CAE Electronics Ltd., as President and General Manager of Bombardier Inc.'s Amphibious Aircraft Division, and as President of Oerlikon Aerospace Inc.

Mr. Cherry is a Chartered Professional Accountant and holds a Bachelor of Commerce degree from McGill University. In 2003, Mr. Cherry was named a Fellow of the Order of Chartered Professional Accountants of Quebec. He is also a recipient of the Queen's Diamond Jubilee Medal, awarded in 2012.

Michèle Colpron

Ms. Colpron currently serves on the boards of the Fonds de solidarité FTQ, the Professional Insurance Liability Fund of the Barreau of Quebec, and the Investment Industry Regulatory Organization of Canada.

Prior to these appointments, Ms. Colpron served 12 years with the Caisse de dépôt et placement du Québec in the roles of Senior Vice-President of Financial Management, Vice-President of Investment Administration, and Vice-President of Finance and Administration – Private Equity. She has also held senior positions in overseas banks, serving as Chief Financial Officer of both Merrill Lynch Bank (Suisse) S. A. and Standard Chartered Bank (Switzerland) S. A.

In 2016, Ms. Colpron was named Fellow of the Order of Chartered Professional Accountants of Quebec (FCPA, FCA). She is also a qualified corporate director duly accredited by Laval University. She holds a Bachelor of Business Administration from HEC Montréal.

Bruno Guilmette

Mr. Guilmette currently serves as President of the Plan A Capital Advisory Committee. He previously served on the Executive Committee and Board of the Global Infrastructure Investor Association and as the Senior Vice-President of Infrastructure at PSP Investments.

Prior to his appointment with PSP Investments, Mr. Guilmette served as the Senior Director of Investments/Infrastructure, Services and Distribution at the Caisse de dépôt et placement du Québec. He has also served on the boards of other organizations, including AviAlliance, Isolux Infrastructure, Transelec, Southern Star and Myria/NGPL.

Mr. Guilmette holds a Bachelor of Commerce from HEC Montréal, along with a Master of Business Administration from McGill University and an ICD.D designation from the Institute of Corporate Directors. Mr. Guilmette is also a Chartered Professional Accountant (CPA, CA) and holds the Chartered Financial Analyst designation.

Christopher Hickman

Mr. Hickman is the Chairman and Chief Executive Officer of Marco Group of Companies. He currently serves on the boards of a number of other organizations, including Nalcor Energy, Labrador Island Link Operating Corporation, Muskrat Falls Corporation, Swilers RFC and the Newfoundland and Labrador Employers Council. He is an honorary Life Member of the Royal St. John's Regatta Committee. Prior to his appointment as Chairman and Chief Executive Officer of Marco Group, Mr. Hickman served as Vice-President of Finance at Marco Group and as President of MarcoProperties Limited and Marco Developments Limited.

Mr. Hickman holds a Bachelor of Commerce from Dalhousie University and a Masters in Business Administration from Memorial University of Newfoundland and Labrador. He has been named one of Atlantic Business Magazine's Top 50 CEOs for five consecutive years, securing a spot in the magazine's Top 50 CEO Hall of Fame in 2011.

Poonam Puri

Ms. Puri is an experienced corporate director and professor of business law at Osgoode Hall Law School in Toronto. She is also a practising lawyer and affiliated scholar at Davies Ward Phillips & Vineberg LLP. Ms. Puri recently completed a nine-year term on the board of the Greater Toronto Airports Authority (GTAA) and currently serves on the boards of several public and private companies. She has served as a director of Women's College Hospital, and she now sits on the Board of Trustees of Holland Bloorview Kids Rehabilitation Hospital in Toronto.

In 2015 and 2017, Ms. Puri was recognized as one of the top 25 most influential lawyers in Canada by Canadian Lawyer Magazine. She has been named one of the 100 Most Powerful Women in Canada, and she is a past recipient of Canada's Top 40 under 40 Award.

Ms. Puri earned her Bachelor of Laws degree from the University of Toronto, and she holds a Master of Laws degree from Harvard Law School.

Stephen Smith

Mr. Smith is the Co-Founder, Chair, and Chief Executive Officer of First National Financial LP. He also serves as Chair of the Canada Guaranty Mortgage Insurance Company and as a board member of various organizations, including Empire Life Insurance Company and the C.D. Howe Institute. He is a member of the Business Council of Canada.

Mr. Smith also served for ten years as a board member of Metrolinx Inc./GO Transit, both as Vice-Chairman and as Chair of the Audit and Finance Committee.

Mr. Smith holds a Bachelor's degree in Electrical Engineering from Queen's University and a Master of Economic Science, with a specialization in the Economics of Industry, from the London School of Economics and Political Science.

Patricia Youzwa

Ms. Youzwa is the former President and Chief Executive Officer of SaskPower. She is the current Chair of the Pooled Funds Advisory Committee for Greystone Managed Investments, the Saskatchewan Vice-Chair of the Canada West Foundation and the RBC Woman Executive in Residence at the Hill School of Business, University of Regina.

Ms. Youzwa has served as Deputy Minister of Economic Development and as Deputy Minister of Energy and Mines for the Government of Saskatchewan. She has also served as a director on numerous boards and has held policy advisory roles at the national level with such organizations as the Canadian Electricity Association, the Energy Council of Canada, the Conference Board of Canada, the Canada Alberta ecoEnergy Task Force on Carbon Capture and Storage and the Minister's Advisory Council on Energy Science and Technology.

Ms. Youzwa holds a Bachelor of Arts in Economics from the University of Saskatchewan and a Master of Arts in Economics from the University of Toronto. In 2012, she was awarded the Queen's Diamond Jubilee Medal and, in 2011, received the Lieutenant Governor's Gold Medal for Excellence in Public Administration.

INTERNATIONAL TRADE / CANADA-INDIA

Global Affairs Canada. November 17, 2017. Historic trade mission to India unleashes new partnerships between Indian and Canadian businesses

Ottawa, Ontario - The Government of Canada is committed to diversifying trade markets to ensure future growth and prosperity for Canadians and Canadian businesses, including small and medium-sized enterprises (SMEs). India is one of the world’s fastest-growing economies and a vibrant market for Canadians seeking to grow their businesses into the Asia-Pacific region and create well-paying jobs at home.

The Honourable François-Philippe Champagne, Minister of International Trade, the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, and the Honourable Marc Garneau, Minister of Transport, today concluded a successful trade mission to India aimed at showcasing the Canadian talent and technologies shaping tomorrow’s economy. Some 120 representatives from more than 85 Canadian companies participated in the trade mission.

More than 300 meetings in total were facilitated over the week to enhance Canada-India commercial relations. These included 200 business-to-business meetings surrounding India’s 23rd Technology Summit, held in New Delhi, as well as numerous high-level interactions with Indian ministers and chief ministers in five cities.

During their mission, the ministers opened doors for Canadian businesses of all sizes seeking to partner with Indian companies and helped to support growth opportunities in a variety of fields, including advanced manufacturing, transportation, health, technology and the digital economy. The ministers highlighted the government’s commitment to diversity and the untapped potential of Canada’s people-to-people ties by engaging with Canadian and Indian female business leaders and small-business owners.

Canada and India have much in common and continue to have well-established partnerships in many areas. Strengthening relations between Canada and India helps foreign investors partner with innovative Canadian firms and contributes to the growth of the middle class through new jobs and business opportunities.

Quotes

“India is a vibrant market that offers boundless opportunities for Canadian companies looking to diversify into the Asia-Pacific region. This historic trade mission to India allowed Canadian companies to share their expertise and take advantage of multiple networking and partnership development opportunities. By deepening Canada’s trade and investment ties with India, we are helping our businesses succeed in creating more jobs, prospects and growth for our middle class.”

- François-Philippe Champagne, Minister of International Trade

“Canada and India share values that are the very foundation of successful trading relationships. Our mutual appreciation for a diverse and inclusive economy will facilitate growth and prosperity for our respective countries. Supporting innovation and strengthening our relationships with global partners will diversify markets, expand industries and promote investment. Canada is home to a strong, hardworking and diversified labour force. Fuelling innovation and encouraging global investment in Canada are important steps that will create more jobs and grow our middle class.”

- Navdeep Bains, Minister of Innovation, Science and Economic Development

“When it comes to innovation, Canada and India are not only world leaders, but also ideal trading partners. Modern trends in technology and in society are changing how people and goods travel. This week, I witnessed first-hand how shared best practices, collaborative ideas and cooperation on transportation issues will help Canadian companies enhance private sector opportunities in India. Ultimately, this will improve lives and allow Canada to trade more efficiently with our international partners.”

- Marc Garneau, Minister of Transport

Quick Facts

• While in India, the travel itineraries of ministers Bains, Champagne and Garneau included Bangalore, Hyderabad, Mumbai, New Delhi and Pune.
• Minister Bains was the first Canadian federal minister ever to make an official visit to the city of Pune. Sometimes referred to as “the Oxford of the East” for its role as a major education hub, Pune is also recognized for its auto manufacturing industries and its emerging position as a technology hub.
• During his visit to India, Minister Champagne visited four cities and announced this year’s recipients of the Canadian International Innovation Program—a funding program offered by Global Affairs Canada designed to support Canadian SMEs undertaking bilateral research and development projects.
• While in India, Minister Garneau signed the extension of the Canada-India memorandum of understanding (MOU) on cooperation in road transportation. The updated MOU covers cooperation in road transportation and intelligent transportation systems and creates opportunities for Canadian companies in India.
• Recognizing the significance of the Indian market, Canada has been increasing its trade support network, which now includes close to 50 trade commissioners in eight different locations.
• In 2016, merchandise trade between Canada and India was valued at $8 billion.

See also:

• Canadian Trade Commissioner Service: http://tradecommissioner.gc.ca/index.aspx?lang=eng
• Canada’s Innovation and Skills Plan: http://www.ic.gc.ca/eic/site/062.nsf/eng/home

INFLATION

StatCan. 2017-11-17. Consumer Price Index, October 2017

Consumer Price Index, October 2017: 1.4% increase (12-month change)
Source(s): CANSIM table 326-0020.

The Consumer Price Index (CPI) increased 1.4% on a year-over-year basis in October, following a 1.6% gain in September. The all-items excluding gasoline index rose 1.3% year over year in October, after increasing 1.1% in September.

Chart 1: The 12-month change in the Consumer Price Index (CPI) and the CPI excluding gasoline

12-month change in the major components

Prices were up in seven of the eight major CPI components in the 12 months to October, with the transportation and shelter indexes contributing the most to the increase. The clothing and footwear index declined on a year-over-year basis.

Chart 2: Consumer prices increase in seven of the eight major components

Transportation prices rose 3.0% on a year-over-year basis in October, following a 3.8% increase in September. This deceleration was led by gasoline prices, which increased 6.5% year over year in October after increasing 14.1% the previous month in the aftermath of Hurricane Harvey. At the same time, the purchase of passenger vehicles index rose 1.5% month over month in October, providing the impetus for the largest year-over-year gain in this index since March 2017.

The recreation, education and reading index increased 1.5% year over year in October, following a 2.1% increase in September. Prices for travel tours contributed the most to this deceleration, increasing 4.4% in the 12 months to October after a 7.3% gain in September. The recreational services index increased 5.2% on a year-over-year basis in October, following a 14.7% increase in September. Meanwhile, prices for digital computing equipment and devices (-4.4%) declined at a slower rate on a year-over-year basis in October than in September.

Consumer prices for household operations, furnishings and equipment rose 0.2% in the 12 months to October after declining year over year for three consecutive months. Prices for telephone services increased 3.9% on a monthly basis, leading to a 0.1% year-over-year decline in October following a 3.1% decrease in September. Prices for child care services increased 2.6% on a year-over-year basis in October. Additionally, the tools and other household equipment index recorded a smaller year-over-year increase for the month than was seen in September.

12-month change in the provinces

Consumer prices rose less on a year-over-year basis in five provinces in October than in September. Prices in Saskatchewan accelerated, while four provinces registered the same CPI increase as in the previous month.

Chart 3   Chart 3: Consumer prices rise at a slower rate in five provinces

Prices in Prince Edward Island increased 1.2% on a year-over-year basis in October after rising 2.4% in September. This was largely attributable to an October 2016 increase in the province's Harmonized Sales Tax, which no longer factors into the 12-month movement of the all-items index. Traveller accommodation prices declined 8.8% year over year in October after increasing 11.1% in September.

The CPI rose 0.9% year over year in Newfoundland and Labrador in October, following a 1.4% gain in September. The property taxes and other special charges index fell 4.2% in the 12 months to October, in contrast to the national-level index, which rose 2.8%. Prices for fresh fruit fell 8.1% in the 12 months to October after increasing 2.2% in September. At the same time, consumer prices for women's clothing declined less in October than in September.

In Saskatchewan, the CPI increased 2.0% in the 12 months to October, after rising 1.9% in September. The increase in consumer prices was partly attributable to the telephone services index (-6.3%), which declined less on a year-over-year basis in October than in September. Prices for food purchased from stores increased 2.2% in the 12 months to October after rising 1.4% in September. Saskatchewan recorded the largest year-over-year provincial price deceleration for children's clothing.

Seasonally adjusted monthly Consumer Price Index

On a seasonally adjusted monthly basis, the CPI increased 0.2% in October, matching the gain in September.

Chart 4: Seasonally adjusted monthly Consumer Price Index

In October, six major components increased while two declined. The household operations, furnishings and equipment index (+0.5%) and the health and personal care index (+0.5%) recorded the largest increases. The recreation, education and reading index (-0.3%) and the food index (-0.2%) both declined.

Chart 5: Property taxes and other special charges index, annual average, Canada, 1987 to 2016

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/171117/dq171117a-eng.pdf

REUTERS. NOVEMBER 17, 2017. Cooler Canada October inflation gives central bank room to wait on rates
Leah Schnurr

OTTAWA (Reuters) - Weaker energy prices pulled Canada’s annual inflation rate lower in October, further distancing it from the Bank of Canada’s target and giving the central bank room to wait until next year to raise interest rates again.

The annual inflation rate decreased to 1.4 percent last month from 1.6 percent in September, Statistics Canada said on Friday, in line with economists’ forecasts.

The central bank’s measures of core inflation were also muted. CPI common, which the central bank says is the best gauge of the economy’s underperformance, edged up to 1.6 percent, while CPI median, which shows the median inflation rate across CPI components, dipped to 1.7 percent.

The Bank of Canada raised interest rates twice earlier this year and has said that while less monetary stimulus will be needed in the future, it will be cautious in increasing rates again.

Senior Deputy Governor Carolyn Wilkins earlier this week cited low inflation as one reason for that caution. The bank targets inflation at 2 percent, the mid-point of a 1 percent to 3 percent range.

A slowing economy and uncertainties over North American trade policy are also expected to keep rates on hold when the central bank meets next month but markets see over 60 percent odds of another increase by next March.

“The moderate inflation pressures evident in the report reinforce the view that there’s no urgency on the part of the Bank of Canada to tighten further,” said Paul Ferley, assistant chief economist at Royal Bank Of Canada.

The Canadian dollar weakened against the greenback following the data.

The transportation component contributed the most to the inflation rate, rising 3 percent on an annual basis, compared with September’s 3.8 percent.

Softer gasoline prices helped drive the deceleration. Gasoline costs were up 6.5 percent year-over-year, but that was significantly lower than September’s 14.1 percent jump in the wake of Hurricane Harvey.

Clothing prices declined 1.5 percent, driven by cheaper costs for women’s apparel. Overall, prices were up in seven of the eight major components of the consumer price index.

The depressed clothing prices resulted from aggressive discounting by retailers, partly because of online competition, said Sal Guatieri, senior economist at Bank Of Montreal.

CPI trim, which excludes upside and downside outliers, rounded out the central bank’s three measures of underlying inflation and was unchanged at 1.5 percent.

Additional reporting by Susan Taylor and Alastair Sharp in Toronto, Editing by Chizu Nomiyama and Steve Orlofsky

FIXED CAPITAL

StatCan. 2017-11-17. Stock and consumption of fixed capital, 2016

• Non-residential stock: $1,936 billion (2007 dollars), 2016, 0.9% increase (annual change)
• Residential stock: $1,872 billion (2007 dollars), 2016, 2.9% increase (annual change)

Source(s): CANSIM table 031-0008

Non-residential capital stock

Non-residential capital stock, which is made up of building and engineering construction, machinery and equipment as well as intellectual property products, was 0.9% higher in 2016 compared with 2015.

The stock of non-residential engineering construction rose 2.1%, following a 3.2% gain in 2015, while the stock of non-residential building construction increased 1.1%. Engineering construction is the construction of assets such as roads, bridges, waterworks and oil and gas production facilities.

The stock of machinery and equipment fell 0.9% in 2016, after decreasing by 0.3% the previous year. Industrial machinery accounted for most of the decline.

The stock of intellectual property products was down 2.0% in 2016. Mineral exploration and evaluation led the decline, as was also the case in 2015. This was the second annual decline after five consecutive years of increases.

When calculating capital stock, a decrease in the stock occurs when the amount of depreciation exceeds the flow of new investment.

Chart 1: End-year net stock

Non-residential capital stock rose in eight provinces and one territory. As in 2015, Newfoundland and Labrador had the strongest growth in 2016, at 10.7%, the result of an acceleration in non-residential engineering construction, followed by Manitoba (+4.1%), Nunavut (+1.9%) and Nova Scotia (+1.3%). The capital stock decreased in Prince Edward Island, New Brunswick, Yukon and the Northwest Territories.

Alberta continues to hold the largest share of capital stock in Canada

Although Alberta recorded a deceleration in its capital stock expansion, the province continued to hold the largest share of Canada's total non-residential stock in 2016 (31.2%). It was the second straight year of declines in Alberta's share, due to lower investment in the oil and gas extraction sector.

Other than Alberta, Quebec and Ontario were the only provinces posting declines in their shares of total non-residential capital stock. In 2016, Newfoundland and Labrador posted the largest increase in its share of Canada's non-residential stock at 2.8%, compared with 2.5% in 2015. The increase was mainly the result of the development of the Hebron offshore oil project and the Muskrat Falls generating facility.

Chart 2: Share of non-residential stock in Canada, 2015 and 2016

In 2016, 24.4% of total non-residential stock in Canada was held by the government and non-profit sectors, a slight increase from 2015 (24.3%), while 29.1% resided in the mining, quarrying and oil and gas extraction industries. For almost half of the provinces and territories, more than one-third of non-residential capital stock was concentrated in the mining, quarrying and oil and gas extraction industries. In 2016, these industries accounted for 69.3% of non-residential capital stock in the Northwest Territories; 64.6% in Nunavut; 61.1% in Alberta; 50.9% in Newfoundland and Labrador; 47.6% in Saskatchewan; and 34.7% in Yukon.

Residential capital stock

Residential capital stock, which consists of new residential construction, renovations to existing structures and transfer costs, rose 2.9% in 2016, the same growth rate as in the previous year. Overall, residential capital stock reached $2.2 trillion in 2016. Over two-thirds of the increase was the result of investment in the construction of new homes, while the remainder was due to renovations on existing residential structures.

With the exception of Nunavut, every province and territory posted a gain in 2016, led by British Columbia (+5.0%) and the Northwest Territories (+3.8%). Meanwhile, residential stock in Nunavut edged down (-0.2%). This was the first time the territory reported a decline.

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/171117/dq171117b-eng.pdf

FINANCE

Department of Finance Canada. November 16, 2017. Canada Issues Ultra-Long Bonds

Ottawa, Ontario – The Government of Canada's plan to strengthen the middle class and to ensure Canadians have the support, resources and confidence they need to succeed, create jobs and grow our economy is working. Issuing ultra-long bonds helps reduce the cost of government financing over the long term and reduces refinancing risk, all to the benefit of Canadian taxpayers.

Today, the Government of Canada issued $500 million in ultra-long bonds on a tactical basis. This reopening of the December 1, 2064 ultra-long bond is in addition to the $4.25 billion in ultra-long bonds that are currently outstanding. This marks the second issuance of ultra-long bonds in 2017, following a $750 million issuance on August 29, 2017.

Quick Facts

• This is the Government's fifth issuance of ultra-long bonds.
• Today, via modified auction, the Government issued $500 million in ultra-long bonds that mature on December 1, 2064 at a yield of 2.25 per cent.
• Canada received strong demand from both domestic and international investors.
• The Government has issued a total of $4.75 billion in ultra-long bonds since the start of 2014.
• Locking in additional low-cost funding for 50 years benefits Canadian taxpayers and reduces the Government's refinancing risk, outcomes consistent with the key objectives specified in the Government's Debt Management Strategy.

DOCUMENT: http://www.fin.gc.ca/n17/17-117-eng.asp

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LGCJ.: