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November 21, 2017

CANADA ECONOMICS



NAFTA



THE GLOBE AND MAIL. NOVEMBER 21, 2017. Get your loons in a row: 'Investors should protect themselves against NAFTA termination risk'. Investors should protect against NAFTA failing. Gimme shelter
MICHAEL BABAD, Columnist


CIBC World Markets believes negotiators will end up with something resembling a North American free-trade agreement, but that Canadian dollar investors should still take shelter.

"We endorse the view that investors should protect themselves against NAFTA termination risk given the level of complacency in the USD/CAD market," said Bipan Rai, CIBC's executive director of macro strategy, referring to the U.S. versus Canadian dollar.

"While we still think that some form [of NAFTA] will hold when the dust settles, the odds that negotiations become very contentious are still high," he added in a recent report.

"That implies that volatility should follow suit, as well."

As many observers have projected, including Mr. Rai in his report, the actual death of NAFTA would send the loonie into a tailspin, based on the expected impact on U.S. direct investment in Canada, which would slow, and the likelihood of a policy "pivot" by the Bank of Canada.

"The CAD market is not prepared for this type of adjustment at the moment given that positioning and sentiment still remain elevated in favour of the loonie," Mr. Rai said.

Mr. Rai isn't alone in warning that investors should be prepared because, given the Trump administration's warnings, the death of NAFTA is certainly a possibility. We may learn more today when the latest round of talks, which started last week, wrap up in Mexico City.

Even if something is salvaged, and many observers believe it will be, tensions will run high for some time yet as negotiators do what negotiators do.

The U.S., Canada and Mexico want it done by the time the second quarter of next year dawns. Remember, too, that Mexico holds elections in mid-2018.

"As such, rhetoric and speculation is likely to remain elevated throughout the negotiation process, potentially peaking in early 2018 (e.g., with the possibility of President Trump sending a letter of intent to withdraw from NAFTA to Congress)," said Brian Belski, chief investment strategist at BMO Nesbitt Burns.

"However, termination of NAFTA would hurt all three countries," Mr. Belski said, noting that the U.S. economy's export exposure is worth 3 per cent of gross domestic product, Canada's 18 per cent, and Mexico's 21 per cent.

"As such, ultimately we believe common sense will prevail and NAFTA will be renegotiated with relatively minor impact on Canadian equities," Mr. Belski added in a 2018 market outlook.

And, for that matter, it's not just the fate of NAFTA that investors have to consider.

"Politics continue to cloud the outlook for North American equities," said Bank of Montreal economist Carl Campus, referring to the debate over tax reform in the U.S.

"Meantime, NAFTA negotiations entered their fifth round [last] week while Canada looked to play a little hardball over the softwood dispute, challenging recently-announced U.S. import duties by requesting a NAFTA dispute resolution panel."

CIBC's Mr. Rai urged investors to prepare a plan.

"While we expect that cooler heads will prevail and that NAFTA termination will not follow through, we'd still advise caution for investors," Mr. Rai said.

"We're still a long ways away from the end of negotiations and the road can get a bit more bumpy along the way. The risk of a CAD selloff is high and the level of complacency is somewhat alarming."

So get your ducks in a row. Or your loons, as the case may be.

THE GLOBE AND MAIL. THE ASSOCIATED PRESS. NOVEMBER 21, 2017. U.S. NAFTA objectives make deal to extend pact remote: Scotiabank
GREG KEENAN, AUTO INDUSTRY REPORTER

Updated U.S. objectives set out for the renegotiation of NAFTA will make an agreement on a new deal to extend the trade pact remote, the Bank of Nova Scotia says.

"The update hardens the U.S. stance with respect to several points on which Canada and Mexico have indicated that they cannot accept the current U.S. proposals," the bank said in an analysis of objectives issued by the U.S. Trade Representative on Friday.

"Other aspects of the update complicate the NAFTA talks by adding into the negotiations efforts by the U.S. to set precedents for other trade agreements and to deal with other distinct foreign-policy challenges," the bank's report said.

The report was issued Tuesday, the final day of the fifth set of negotiations in Mexico City.

The updated objectives, which follow those set by the USTR in July, specify that Canada's supply management system for dairy, poultry and egg products is a key target of the Americans and point to technical barriers to U.S. grain and alcohol beverages, which refers to two complaints it made to the World Trade Organization about how U.S. wines are displayed in B.C. grocery stores.

On rules of origin for manufactured goods, which has become one of the key sticking points in the NAFTA talks, the Americans now call for rules that "incentivize production in North America as well as specifically in the United States," the bank quoted the objectives as saying.

"The new version of this goal underscores the U.S. poison pill demand to tighten U.S. and NAFTA content requirements," the report said.

That update adheres to Commerce Secretary Wilbur Ross's focus on the auto sector, which has also been singled out by President Donald Trump as an example of how NAFTA has failed the United States, even though vehicle production in that country is now higher than it was before the agreement came into place in 1994.

Both Canada and Mexico have rejected demands on autos – 85 per cent North American content in all vehicles built in the three countries and 50 per cent U.S. content in vehicles made in Canada and Mexico – as non-starters that are not even worthy of negotiation.

The extra focus on rules of origin in the updated objectives issued Friday may be an attempt by the Americans to complicate participation by its two NAFTA partners in the Trans-Pacific Partnership, the bank's report said.

"The update puts a sharper point on many areas of disagreement that will become more difficult to resolve," the bank said.

REUTERS. NOVEMBER 21, 2017. NAFTA nations lock horns on U.S. auto demands as fifth round ends
Reuters Staff

MEXICO CITY (Reuters) - Negotiators from the United States, Mexico and Canada square off on Tuesday for the last time in a fifth round of talks to rework the North American Free Trade Agreement, with stalemate brewing on a contentious proposal to ramp up regional content for autos.

Officials and lobbyists say Mexico and Canada will firmly push back against the U.S. demand to raise the minimum threshold for NAFTA autos to 85 percent from 62.5 percent, as well as insist that fully half the content is from the United States.

The proposal is a central plank of U.S. President Donald Trump’s America First strategy to bring back manufacturing jobs to the United States, though it faces stiff resistance from the auto industry, which questions its viability.

Mexican and Canadian officials say they want the United States to explain how the auto plan could prosper in view of the skepticism, and have repeatedly indicated they have no intention of responding to the scheme with a counterproposal.

Tuesday will be the seventh day negotiators have met during this Mexico round, and officials hope to make announcements that can inject some momentum into a process that more pessimistic observers fear is running out of steam.

The current round has been less confrontational than the negative tone of the October talks in Washington, where the United States set out a series of tough demands, including the auto plan, said Caroline Freund, a senior fellow and trade expert with the Peterson Institute for International Economics in Washington.

“With U.S. tax reform front and center, the U.S. government really didn’t want to make this a big round, and (wanted) to let the technocrats get on and do the negotiating on the less controversial bits,” Freund said.

Expectations for any major advances in the fifth round were scaled back when the three sides announced that the ministers in charge of the NAFTA trade portfolio would not attend the talks. Progress has been halting with the clock ticking.

The three countries have agreed to continue negotiating through the end of March, when the campaign for the 2018 Mexican presidential election will get underway.

Negotiators are eager not to allow the NAFTA revamp to become politicized by the Mexican election campaign.

Mexican officials initially expressed hope that some chapters could finally be closed during the fifth round, pointing to topics such as telecoms and e-commerce. However, no concrete evidence of that has been forthcoming so far.

The 1994 accord underpins much of the more than $1 trillion in annual trilateral trade, and Trump’s repeated threats to dump NAFTA if he cannot rework it in the United States’ favor have spooked investors in Mexico in particular.

Reporting by Dave Graham and David Lawder; Editing by Simon Cameron-Moore

Competition Bureau Canada. November 20, 2017. Competition Bureau reinforces ties with U.S. and Mexican competition authorities

Meeting: Commissioner of Competition John Pecman with Makan Delrahim, Assistant Attorney General of the U.S. Department of Justice’s Antitrust Division; Maureen Ohlhausen, Acting Chairman of the U.S. Federal Trade Commission; and Alejandra Palacios Prieto, Chair of the Mexican Federal Economic Competition Commission.

OTTAWA, ON –  Commissioner of Competition John Pecman met with his American and Mexican counterparts today in Washington, D.C., to continue strengthening North American cooperation in competition law enforcement.

The Commissioner joined Makan Delrahim, Assistant Attorney General of the U.S. Department of Justice’s Antitrust Division; Maureen Ohlhausen, Acting Chairman of the U.S. Federal Trade Commission; and Alejandra Palacios Prieto, Chair of the Mexican Federal Economic Competition Commission.

The agency heads shared best practices and discussed a number of areas of common interest, including recent cases, enforcement approaches in the digital economy, opportunities for inter-agency training and collaboration, as well as competition advocacy priorities.

Commissioner Pecman highlighted Canada’s ongoing efforts to promote innovation and competition in the digital economy, including the Competition Bureau’s recent white paper on the implications of big data for competition policy and its market study of the burgeoning FinTech sector.

The U.S. and Mexico are two of Canada’s most important economic partners. The Bureau’s international partnerships help ensure that Canadian consumers benefit from competitive prices and that Canadian businesses prosper in both domestic and foreign markets.


Quick Facts

  • Cooperation with the Bureau’s international counterparts aids in the effective enforcement and administration of the Competition Act.
  • The Bureau has cooperation instruments in place with 15 jurisdictions: Australia, Brazil, Chile, Colombia, the European Union, Hong Kong, India, Japan, New Zealand, the People’s Republic of China, the Republic of Korea, Mexico, Taiwan, the United Kingdom and the United States.
  • To enhance cross-border enforcement and promote sound competition policies internationally, the Bureau and its North American partners also participate in multilateral fora, such as the International Competition Network and the Organisation for Economic Co-operation and Development’s Competition Committee.


See also:





ENERGY


The Globe and Mail. The Canadian Press. 21 Nov 2017. Route for Keystone approved, clearing hurdle for Alberta oil. Pipeline: Energy-industry analysts characterize new route’s approval as a clear, if limited, win for 
SHAWN McCARTHY, OTTAWA
JEFF LEWIS, CALGARY

TransCanada warns Nebraska decision on alternative path does not guarantee pipeline will be built
Nebraska has approved an alternative route for TransCanada Corp.’s $8-billion (U.S.) Keystone XL pipeline, a ruling that removes a key hurdle in the decade-long quest to link Alberta’s oil sands to U.S. refineries on the Gulf Coast – but will create more uncertainty for the controversial project.
The Monday ruling is far from an unqualified victory and would add costs and further delays to the project. Still, the decision was immediately welcomed by the Alberta-based oil industry and governments in Edmonton and Ottawa.
The 3-2 decision is likely to face appeals by landowners and environmentalists, who contend the ruling approves a route with little study and invalidates the presidential permit issued by U.S. President Donald Trump last March that was based on the company’s preferred route.
TransCanada issued a brief statement Monday signalling it would study the decision’s impact on the project’s costs and schedule. TransCanada shares were up 1.5 per cent in late afternoon trading on the Toronto Stock Exchange.
“While today’s Keystone XL pipeline approval is an important milestone, it does not provide certainty that the project will ultimately be built and begin operating,” Gavin MacFarlane, a vice-president at Moody’s Investors Service, said in a statement.
Calgary-based TransCanada has sought approvals for Keystone XL for nearly 10 years; it was turned down by president Barack Obama in 2015, only to be revived by Mr. Trump. The project would deliver up to 830,000 barrels a day of crude from Alberta to Steele City, Neb., where it will connect with an existing pipeline network to the U.S. Gulf Coast. The company has not committed to build the project, despite saying earlier this month that it had secured adequate commitments from crude oil shippers.
On Monday, the Nebraska commission said the pipeline can be built along a route that more closely follows the company’s existing Keystone line through the state, shifting the expansion east of TransCanada’s preferred path.
The company had already secured easements from 90 per cent of landowners on its chosen route. It now faces the prospect of lengthy negotiations with a new set of landowners at the same time it cleans up last week’s 5,000-barrel oil spill in South Dakota that shut down portions of the original Keystone pipeline.
Brian Jorde, the lawyer representing Nebraska landowners opposed to the pipeline, said his clients scored a major victory in defeating TransCanada’s preferred route, and the company still has a major battle on its hands to proceed on the alternate one.
“The landowners haven’t lost until the pipeline is under construction, and we’re years from that happening, if ever,” Mr. Jorde said in an interview. He argued that the new route has not been approved by the federal government, nor did it receive extensive reviews by the state.
“The landowners that would be on that route are learning of it for the first time today, and they did not have a voice at the Public Service Commission hearings where they could make their issues and concerns heard,” Mr. Jorde said. As a result, he said they have clear grounds for appeal, as was noted in a dissenting opinion by Nebraska Commissioner Crystal Rhoades.
TransCanada itself had argued during hearings that its preferred route was far superior to the one the commission approved on Monday. “If the Keystone XL pipeline were to follow the mainline in its entirety, it would require considerably greater length in the overall pipeline route than the preferred route currently uses,” the company said in a final submission to the commission.
“This additional length would cause greater environmental impact and render the route inferior to the preferred route.”
Pipeline opponents argue the Nebraska commission’s decision invalidates the permit issued by Mr. Trump last March. That permit was subject to the condition that the pipeline be “in all material respects” as described in the State Department’s final environmental assessment issued in January, 2014.
That State Department review was based on TransCanada’s preferred route, but it did include assessments of alternatives, including the one approved Monday by the Nebraska commission.
Mr. Trump and Secretary of State Rex Tillerson could simply declare that the change in route does not invalidate the federal border-crossing permit, a move which could then be challenged in court.
In Ottawa, Natural Resources Minister Jim Carr acknowledged that the ruling was not a clear-cut victory. “There are some route alternations. The proponent understands that and will make the necessary adjustments,” he said. “But this was the major hurdle and the hurdle has been overcome.”
Energy-industry analysts characterized the decision as a clear, if partial, win for TransCanada and its oil-shipper customers.
“With today’s decision, TransCanada definitely has cleared a major regulatory hurdle – likely their last major regulatory hurdle,” Zachary Rogers, analyst for Wood Mackenzie, said in an interview.
“For Western Canadian producers, [the Keystone pipeline] provides them cheaper access to a lucrative market on the U.S. Gulf Coast. As a result, Western Canadian producers likely won’t have to discount their crude prices to the extent we’ve seen in recent years.”
Speaking in Toronto, Alberta Premier Rachel Notley praised the decision and urged Canadian regulators to follow the U.S. example. “We also need to access the Asia-Pacific market and we need to diversify our markets in order to get the best price for our product and to reduce the degree which we suffer through a pretty significant discount in Alberta. So what we still need to do is get that pipeline to the West Coast constructed and that’s good for all Canadians and the Canadian economy, not just for Albertans.”



The project would deliver up to 830,000 barrels a day of crude from Alberta to Steele City, Neb., where it will connect with an existing pipeline network to the U.S. Gulf Coast. The company has not committed to build the project, despite saying earlier this month that it had secured adequate commitments from crude oil shippers.
On Monday, the Nebraska commission said the pipeline can be built along a route that more closely follows the company’s existing Keystone line through the state, shifting the expansion east of TransCanada’s preferred path.
The company had already secured easements from 90 per cent of landowners on its chosen route. It now faces the prospect of lengthy negotiations with a new set of landowners at the same time it cleans up last week’s 5,000-barrel oil spill in South Dakota that shut down portions of the original Keystone pipeline.
Brian Jorde, the lawyer representing Nebraska landowners opposed to the pipeline, said his clients scored a major victory in defeating TransCanada’s preferred route, and the company still has a major battle on its hands to proceed on the alternate one.
“The landowners haven’t lost until the pipeline is under construction, and we’re years from that happening, if ever,” Mr. Jorde said in an interview. He argued that the new route has not been approved by the federal government, nor did it receive extensive reviews by the state.
“The landowners that would be on that route are learning of it for the first time today, and they did not have a voice at the Public Service Commission hearings where they could make their issues and concerns heard,” Mr. Jorde said. As a result, he said they have clear grounds for appeal, as was noted in a dissenting opinion by Nebraska Commissioner Crystal Rhoades.
TransCanada itself had argued during hearings that its preferred route was far superior to the one the commission approved on Monday. “If the Keystone XL pipeline were to follow the mainline in its entirety, it would require considerably greater length in the overall pipeline route than the preferred route currently uses,” the company said in a final submission to the commission.
“This additional length would cause greater environmental impact and render the route inferior to the preferred route.”
Pipeline opponents argue the Nebraska commission’s decision invalidates the permit issued by Mr. Trump last March. That permit was subject to the condition that the pipeline be “in all material respects” as described in the State Department’s final environmental assessment issued in January, 2014.
That State Department review was based on TransCanada’s preferred route, but it did include assessments of alternatives, including the one approved Monday by the Nebraska commission.
Mr. Trump and Secretary of State Rex Tillerson could simply declare that the change in route does not invalidate the federal border-crossing permit, a move which could then be challenged in court.
In Ottawa, Natural Resources Minister Jim Carr acknowledged that the ruling was not a clear-cut victory. “There are some route alternations. The proponent understands that and will make the necessary adjustments,” he said. “But this was the major hurdle and the hurdle has been overcome.”
Energy-industry analysts characterized the decision as a clear, if partial, win for TransCanada and its oil-shipper customers.
“With today’s decision, TransCanada definitely has cleared a major regulatory hurdle – likely their last major regulatory hurdle,” Zachary Rogers, analyst for Wood Mackenzie, said in an interview.
“For Western Canadian producers, [the Keystone pipeline] provides them cheaper access to a lucrative market on the U.S. Gulf Coast. As a result, Western Canadian producers likely won’t have to discount their crude prices to the extent we’ve seen in recent years.”
Speaking in Toronto, Alberta Premier Rachel Notley praised the decision and urged Canadian regulators to follow the U.S. example. “We also need to access the Asia-Pacific market and we need to diversify our markets in order to get the best price for our product and to reduce the degree which we suffer through a pretty significant discount in Alberta. So what we still need to do is get that pipeline to the West Coast constructed and that’s good for all Canadians and the Canadian economy, not just for Albertans.”



TPP



The Globe and Mail. 21 Nov 2017. Article. The new TPP aims to end unfairness for Japanese auto makers in Canada. Why the new TPP will boost Canada’s automotive sector
DAVID WORTS, Executive director of the Japan Automobile Manufacturers Association of Canada

Completing the CPTPP will also send a strong signal to the international community that multilateral or regional trade agreements are alive and well. What’s more, the welcome mat is still there for other countries to join the party.

Setting aside the mixed messages in news reports coming out of Vietnam on the sidelines of the recent APEC summit, Canada seems to have embraced the transformation of the Trans-Pacific Partnership, now renamed the CPTPP (Comprehensive and Progressive TPP). Although expectations were high going into the leaders’ meeting in Danang for an agreement in principle, all parties managed to reach an agreement on “core elements” of the new CPTPP, leaving a few issues for further negotiations.
Clearly time was of the essence; but as trade negotiators remind us, “Nothing is agreed until everything is agreed.” Although smaller in scope, the fact remains that the CPTPP is still an ambitious, complex and modern trade agreement. This is a significant opportunity. Completing the CPTPP will also send a strong signal to the international community that multilateral or regional trade agreements are alive and well. What’s more, the welcome mat is still there for other countries to join the party.
The members of the Japan Automobile Manufacturers Association of Canada support diversified trade liberalization for the mutual benefits which accrue to all trade signatories from enhanced business opportunities, as well as advantages for consumers. As global value chains forge stronger economic linkages with major trading partners, we urge Canada to continue pursuing diversified trade initiatives in Asia-Pacific with the CPTPP, building on the provisional implementation of the Canada-European Union trade agreement (CETA) and the fully implemented Canada-Korea free-trade agreement.
The CPTPP, according to a recent analysis by the Canada West Foundation, will offer expanding trade and business opportunities for Canadian exporters in Asia-Pacific, including a first-mover advantage particularly with respect to the Japanese market. While the study claims the impact on the auto sector would be neutral, we believe the CPTPP also offers the opportunity to boost production and exports from Canadian plants with preferential access to CPTPP markets, especially Japan.
Put simply, finalization of the CPTPP will put an end to the unfairness that Japanese auto makers in Canada, whose manufacturing footprint has been long-standing and continues to grow, have faced vis-à-vis automakers from other countries that do not manufacture in Canada. Moreover, tariff phase-outs on motor vehicles are important and timely as they will restore a level playing field that was lost for Japanese auto makers in Canada after the Canadian government signed trade deals with South Korea and, most recently, Europe.
With respect to automotive rules of origin, we believe flexible, predictable, simple and forward-looking rules of origin (ROO) for autos in the CPTPP will reflect the realities of current global supply chains.
As most auto makers embrace “just-in-time” or lean manufacturing, as well as a business philosophy of “build where we sell” in close proximity with key suppliers, the auto-parts industry in Canada does well when auto makers’ plants in Canada are strong and have flexible rules that allow them to compete globally.
Honda’s Alliston, Ont., plant is now the global lead for the new Civic, and Toyota’s recent reinvestment in the Lexus RX plant as well as future investment in RAV4 production in their North and West plants illustrate this reality. Moreover, as supplier relationships have steadily grown over the past 30 years, competitive Canadian suppliers will continue to benefit.
Currently, only U.S. and Japanese auto makers are manufacturing light-duty motor vehicles in Canada for both domestic and export markets. As U.S. auto makers in Canada have had the benefit of duty-free treatment particularly from their home market since the 1965 Auto Pact, Canada should also extend the same duty-free treatment to Japanese auto makers in Canada, who now represent 43 per cent of total light-vehicle production in Canada.
And it’s not just about “cheaper” imported vehicles. This will also send a positive message to Japanese auto makers with significant investment in Canadian manufacturing, as well as sales and service operations that have created 80,000 direct and indirect jobs. This growing commitment to Canada supports gainful employment for more than 200,000 across Canada as a result of spin-off effects from local manufacturing operations, as well as more than 1,230 dealerships from coast to coast.
Bottom line: The CPTPP agreement will finally and effectively create a balanced and competitive auto market in Canada, and allow Canadian consumers competitive access to a wider range of safe, environmentally friendly, advanced technology and alternative powertrain vehicles.

BLOOMBERG. 21 November 2017.Trudeau Replaces Trump as Biggest Obstacle to Pacific Trade Pact
By Josh Wingrove  and Isabel Reynolds

  • TPP could be signed without Canada, Japanese newspaper reports
  • Canada wary that TPP may complicate talks with U.S., Mexico

Donald Trump is old news: Justin Trudeau is now seen as the biggest obstacle to sealing a groundbreaking Pacific trade agreement.

Canada’s prime minister has been criticized by Australian and Japanese media since failing to show for a Nov. 10 summit in Vietnam with the other 10 leaders of countries still involved in the Trans-Pacific Partnership. While Japan in particular wants a quick deal on the pact that Trump abandoned earlier this year, Canada says more talks are needed on contentious points.

Canada saw the framework agreement announced in the city of Danang as a sort of pathway for further talks and not a tentative deal, according to a Canadian government official, who asked not to be identified. Trudeau’s government sees Japan and Australia pressuring Canada in a bid to prevent smaller economies like Vietnam, Malaysia and Brunei from pushing for more changes, the official said.

The bickering threatens to further delay a deal in the works for about a decade that was originally seen as a guarantee of U.S. engagement with Asia and a buffer against China’s rising clout. After Trump’s exit, Japan has led a push to complete the deal, agreeing with the other members to suspend 20 sections of the pact partly on the hope that the U.S. will rejoin one day.

Japan wants an agreement as soon as possible, and may look to move ahead without Canada if necessary, the Sankei newspaper reported this week, citing an unidentified negotiator. In an interview with Bloomberg last week, Economy Minister Toshimitsu Motegi urged the remaining members to sign up before some of them face elections next year.

French Speakers

Canada is looking to strengthen a cultural exemption in the agreement that will allow Trudeau’s government to, in part, support language rights of the French-speaking population, a key part of his voter base. The move suggests the Trudeau government wants the freedom to subsidize and incentivize French-language and other programming, particularly digital and online Canadian content, without fear of a trade challenge.

Trudeau inherited the TPP from predecessor Stephen Harper and has always stopped short of full-throated support for the pact. He’s signaled Canada won’t be rushed into a TPP deal, and his government is almost entirely preoccupied by ongoing Nafta talks with the U.S. and Mexico.

The Canadian government official said there’s a fear that allowing the current TPP wording on cultural exemptions will complicate Nafta talks further -- particularly as Trump threatens to withdraw, as he did with the TPP.

The Sankei article indicated that other countries including Japan wouldn’t support changing the cultural exemption -- a point that Deputy Chief Cabinet Secretary Kotaro Nogami disputed on Tuesday.

‘Gobsmacked’

“The proposal has not been rejected at this point,” Nogami said. “We agreed at Danang that the 11 countries should put the TPP into effect, and we are not discussing signing it without one particular country.”

Australian Trade Minister Steve Ciobo earlier this month called Trudeau’s non-appearance at the Vietnam TPP summit a “disappointing development.” That may have cost Canada a chance at being included in the East Asia Summit, an 18-nation group that covers economic and security affairs in the region, the Australian Financial Review reported on Nov. 16.

“Sure, if you were worried about Nafta and other domestic issues, flag it during the process,” the report quoted a senior official as saying. It added that “delegations and leaders were gobsmacked at their behavior.”

— With assistance by Jason Scott


WHOLE SALE



StatCan. 2017-11-21. Wholesale trade, September 2017


  • Wholesale sales — Canada: $62.0 billion, September 2017, -1.2% decrease (monthly change)

Source(s): CANSIM table 081-0011.

Following two months of increases, wholesale sales declined 1.2% to $62.0 billion in September, the second decline of 2017. Decreases were recorded in five of seven subsectors, led by the personal and household goods and the food, beverage and tobacco subsectors.

In volume terms, wholesale sales declined 1.1%.

In the third quarter, current dollar wholesale sales increased 1.5% while constant dollar sales increased 2.0%. For both current and constant dollars, this marked the sixth consecutive quarterly increase.

Chart 1: Wholesale sales decrease in September

Chart 1: Wholesale sales decrease in September

September decline attributable to decreases in five of seven subsectors

The personal and household goods subsector reported the largest decline in dollar terms in September, dropping 4.8% to $8.6 billion. This was the first decline since November 2016 and more than offsets the 3.2% increase in August. All but one industry in this subsector reported declines in September, led by the textile, clothing and footwear industry.

Sales in the food, beverage and tobacco subsector fell 2.2% to $11.7 billion, a second consecutive monthly decline and bringing the subsector to its lowest level since March 2017. While all three industries declined, the decrease in the food industry was the leading contributor to September's downward movement.

Wholesalers in the machinery, equipment and supplies subsector posted a 2.1% decrease in September, to $12.0 billion. This was the second consecutive decline for the subsector and the third decrease in five months. Lower sales in the subsector were mostly attributable to the farm, lawn and garden machinery and equipment (-10.2%) and the computer and communications equipment and supplies (-3.3%) industries.

Meanwhile, sales in the building material and supplies subsector increased 2.6% to $8.9 billion in September, on the strength of gains recorded by the lumber, millwork, hardware and other building supplies industry (+4.9%).

Sales in the motor vehicle and parts subsector increased 1.4% to $12.0 billion, led by the motor vehicle industry (+2.2%).

Sales down in eight provinces, led by Quebec and Ontario

Quebec recorded the largest decline of all provinces in September, with sales falling 2.4% to $11.0 billion, their first decrease in three months. Sales were down in six of seven subsectors, led by decreases in the food, beverage and tobacco (-3.1%) and the machinery, equipment and supplies (-5.4%) subsectors.

Ontario recorded the second largest dollar-value decline in September, with sales decreasing 0.6% to $32.0 billion. Decreases were mainly attributable to declines in the personal and household goods (-6.6%) and the miscellaneous (-2.6%) subsectors, and were partially offset by gains in the motor vehicle and parts subsector. This was Ontario's first monthly decline since November 2016.

Sales in British Columbia declined for the second consecutive month, dropping 2.0% to $6.5 billion. Decreases were led by the food, beverage and tobacco (-5.1%) and the motor vehicle and parts (-6.8%) subsectors. While sales in British Columbia have declined 3.1% over the past two months, sales remain up 13.1% year over year.

Sales in Saskatchewan recorded a fourth decrease in five months, falling 5.7% in September to $2.2 billion. A 19.2% decline in the machinery, equipment and supplies subsector accounted for the majority of the drop. Saskatchewan has recorded the lowest growth rate of all provinces year over year, increasing by 0.7% in wholesale sales since last September.

Alberta was one of two provinces to record an increase in September, rising 0.6% to $6.7 billion. Alberta's growth was driven by increases in the machinery, equipment and supplies (+2.7%) and the farm products (+42.7%) subsectors. In August, Alberta recorded the largest decline among the provinces.

Inventories build up in September

Wholesale inventories rose 0.6% to $81.1 billion in September, the fifth increase in six months.

Chart 2: Inventories build up in September

Chart 2: Inventories build up in September

In dollar terms, the machinery, equipment and supplies subsector (+2.5%) posted the largest gain, following a 1.2% decline in August. The farm, lawn and garden machinery and equipment (+7.4%) and the construction, forestry and mining (+0.7%) industries contributed the most to the upturn.

The building materials and supplies subsector (+3.5%) rose for the second consecutive month, on the strength of higher inventories in the lumber, millwork, hardware and other supplies industry (+6.1%). The electrical, plumbing, heating, air-conditioning equipment and supplies industry also contributed to the increase.

The food, beverage and tobacco (-0.3%) and the personal and household goods (-1.5%) subsectors declined for the first time in six months.

Inventories in the farm product subsector fell 8.0% in September, a fifth decrease in six months.

The motor vehicle and parts subsector fell 1.8% in September after two monthly increases.

The inventory-to-sales ratio increased from 1.29 in August to 1.31 in September. This ratio is a measure of the time in months required to exhaust inventories if sales were to remain at their current level.

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/171121/dq171121a-eng.pdf

REUTERS. NOVEMBER 21, 2017. Canada September wholesale trade unexpectedly drops on personal goods

OTTAWA (Reuters) - The value of Canadian wholesale trade unexpectedly dropped in September after two months of increases, pulled down by fewer sales in the personal goods and food sectors, data from Statistics Canada showed on Tuesday.

The 1.2 percent decline from the previous month was far short of economists’ forecasts for an increase of 0.3 percent. Stripping out the effects of price changes, volumes decreased by 1.1 percent.

Still, it was only the second time this year that the value of wholesale trade fell, and sales were up 1.5 percent in the third quarter. The strong pace of economic growth Canada saw in the first half of the year is expected to slow in the last six months of 2017.

Sales declined in five out of seven sectors in September, accounting for 66 percent of wholesale trade. The drop was led by a 4.8 percent decrease in the personal and household goods sector, amid fewer sales of textiles, clothing and footwear.

The food, beverage and tobacco sector fell by 2.2 percent, taking it to its lowest since March, weighed by the food industry.

The motor vehicle and parts sector helped temper some of the overall decline, with sales in the industry up 1.4 percent. Canadian auto sales have been strong this year so far.

Reporting by Leah Schnurr; Editing by Bernadette Baum

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