CANADA ECONOMICS

INTERNATIONAL TRADE: CANADA - CHINA

The Globe and Mail. 4 Dec 2017. The Prime Minister is expected to announce that he will be the first leader among Group of Seven countries to launch free-trade talks with the oneparty dictatorship. Plight of Canadians detained by Beijing threatens to overshadow the PM’s visit
STEVEN CHASE, BEIJING

Business lobbyists say they expect Mr. Trudeau to announce Canada-China trade talks during the visit.
Justin Trudeau arrived in China Sunday for a trip that will mark an Asian pivot in Canadian foreign policy with an expected announcement that he will be the first leader among Group of Seven countries to launch free trade talks with the one-party dictatorship.
The Liberal government insists it is still mulling this venture that polls show divides Canadians, but business lobbyists including Canadian Chamber of Commerce president Perrin Beatty say they expect Mr. Trudeau will make the announcement on what is his second official trip to China. This move, an effort to diversify outside of the United States’ orbit, would also be a signal to the protectionist Trump administration that Canada is making backup plans as NAFTA negotiations sour.
Mr. Trudeau will meet with Premier Li Keqiang in Beijing on Monday and President Xi Jinping on Tuesday before heading to Guangzhou to tout trade with Canada.
One economic expert is cautioning, however, that Canada will have to extract a better deal than any previous accord China has signed for such an agreement to be worthwhile for Canadians. Beijing has long sought Canada’s presence at the free-trade negotiating table in part because such talks would grant it fresh leverage to convince other G7 countries to follow suit. China has signed deals with jurisdictions ranging from Australia to Peru to Iceland and last week wrapped up an agreement with the Palestinian Authority. “There is a lot of symbolism attached to this [for China]; it’s more than just pure economic access,” Patrick Leblond, an expert in global economics at the University of Ottawa’s graduate school of public and international affairs.
The plight of detained Canadians looms over Mr. Trudeau’s visit. Speaking to reporters on Sunday en route to China with Mr. Trudeau, International Trade Minister François-Philippe Champagne went so far as to criticize Beijing for their treatment of B.C. wine merchant John Chang, who has been imprisoned for 20 months over a customs dispute. Mr. Chang’s wife, Allison Lu, has also been prevented from leaving China.
“We have voiced very clearly our dissatisfaction and our concern with respect to that … this is a matter that should not have led to the type of action that was taken,” Mr. Champagne said.
Mr. Trudeau, who once professed admiration for China’s “basic dictatorship” because it allows the Chinese to “turn their economy around on a dime,” has for some time set his sights on closer alignment with Beijing. His outreach is meant to undo the damage that business leaders and analysts said Stephen Harper caused to Sino-Canadian ties by a more standoffish and hawkish approach.
Earlier this year, the Trudeau government broke with the United States to join the China-led Asian Infrastructure Investment Bank, a counterpart to the U.S.led World Bank.
Proponents argue that the reciprocal gains from allowing China greater access to Canadian markets are too good to pass up. A report by the Canadian Chamber of Commerce released in September cites economic projections that a free-trade agreement could boost Canada’s annual economic output by $7.8billion by 2030 and generate 25,000 new jobs.
“We can’t ignore a billion people,” says Stewart Beck, president of the Asia Pacific Foundation of Canada, a think tank backed by Ottawa.
The task of extracting a good deal from China will be difficult. China’s brand of authoritarian capitalism means state-owned or sponsored enterprises dominate significant portions of the economy and benefit from major subsidies.
The plight of the jailed Mr. Chang, a Taiwanese-Canadian who used to go on government trade missions to China, is overshadowing Mr. Trudeau’s trip. Mr. Chang’s daughter has called for the Prime Minister to put negotiations on hold until her father is released.
But Mr. Beck says Canadians shouldn’t mix Canadian trade relations with Beijing and the plight of detained citizens. “Consular issues and trade issues: I know everybody likes to roll those things together. They have to be treated separately,” he said.
A poll commissioned by the Asia Pacific Foundation this year after Donald Trump was inaugurated as U.S. President suggested there’s been a major increase in support among Canadians for free-trade talks with China. A small majority of respondents – 55 per cent – back the idea of negotiations, a result that represents a rise of 19 percentage points from support levels recorded in 2014, Mr. Beck said.
Pollster Darrell Bricker at Ipsos cautions against policy makers assuming Canadians are solidly behind a deeper economic relationship with China, saying the one-party government and purchases of  Canadian firms by Chinese companies make Canadians anxious.
“I can tell you on China, Canadians’ opinions are decidedly tense. … They’re seen as a country that is not a democracy,” he said.

The Globe and Mail. 4 Dec 2017. To sell free trade with Beijing, PM must answer China shock
CAMPBELL CLARK, Columnist

Donald Trump isn’t right about trade, but he was partly right about trade with China: It had a disruptive effect on U.S. manufacturing jobs. As Prime Minister Justin Trudeau heads to China this week for a visit centred on the possible launch of free-trade talks, his key challenge is still to convince Canadians it won’t lead to another China shock.
China shock is the impact that the rapid rise of Chinese industry had on U.S. manufacturing jobs. Now, there’s evidence Canada had a China shock of its own.
In July, a little-noticed economics paper commissioned for Global Affairs Canada and conducted by the Centre for the Study of Living Standards came up with a startling number: Trade with China, it found, was responsible for the loss of 105,000 manufacturing jobs in Canada between 2001 and 2011. That’s not proof that trade with China damages the economy, or that free trade will. There can be trade benefits, too. But it is evidence that trade can have disruptive effects on the lives and livelihoods of Canadians.
Mr. Trudeau promised an answer for that. While Mr. Trump rode the grievances about trade to power, responding to the sentiment that elites benefited and ordinary folks suffered by promising a wave of protectionism, Mr. Trudeau said there was another way. Free trade could mean “inclusive growth,” he said, and his government has promoted the notion of “progressive trade.”
But so far, he hasn’t put forward any policies that would really mitigate the impacts of trade on jobs, or found a way
to assure Canadians that free trade with China won’t bring a shock. No Canadian PM has ever faced the kind of strategic trade conundrum that Mr. Trudeau faces now. Mr. Trump is threatening to blow up the North American free-trade agreement, but Mr. Trudeau just balked at closing the 11country Trans-Pacific Partnership because it could expose Canada’s auto sector to Japanese competition and complicate NAFTA talks. It’s natural to try to expand trade with China. But that sparks fear.
China is a big, authoritarian country. Some Canadians don’t want a deal with a regime whose values and humanrights record they abhor. They don’t want Chinese state influence in Canada, either. But China, already our secondlargest trading partner, is not going away. A deal might mean opportunity, if Canada truly can gain guaranteed access to Chinese markets. But Mr. Trudeau will still need to answer the questions about disruption to Canadian jobs.
Economists who were once confident about the unalloyed benefits of trade liberalization are a little less san
guine now. Studies in the United States, led notably by MIT economist David Autor, found Chinese competition not only hurt U.S. manufacturing jobs, it hit hard in many local areas that depended on those jobs. Unemployment rose and wages were depressed, and other jobs didn’t replace
them. The flood of goods from a rapidly industrializing, lowwage economy wasn’t absorbed easily. It was a shock.
In Canada, research by the Centre for the Study of Living Standards found Chinese competition was responsible for an even greater portion of this country’s manufacturing decline – 21 per cent of the drop in Canada’s manufacturing sector between 2001 and 2011. Canada lost 508,000 manufac
turing jobs in that period, partly owing to things such as au
tomation and a high dollar, but Chinese competition was responsible for one-fifth of the job losses, the study found.
It isn’t clear, however, that local labour markets here were damaged as with those in the United States. There was a correlation between areas with industries exposed to Chinese competition and job losses (centred in Quebec and Ontario). But many of those areas are doing well now. In Quebec, some areas have low unemployment rates not seen since

the 1970s. There’s another reason the China shock should be less scary now: It’s largely in the past. China’s low-wage industry exploded in the 1990s and 2000s, but wages have risen there. And a free-trade deal won’t make wages in China go down again and won’t necessarily cause a new China shock. That doesn’t mean Canadians do not have a reason to fear that jobs might be disrupted. Amid all the other fears about free trade with China, concerns about jobs here will be the most stubborn. It was Mr. Trudeau who promised inclusive growth, and he will have to answer that concern if he is going to sell a deal with China.

THE GLOBE AND MAIL. DECEMBER 4, 2017. TRADE. Canada-China free trade talks in limbo in Beijing
STEVEN CHASE, BEIJING
NATHAN VANDERKLIPPE, BEIJING

The fate of expected free trade talks between Canada and China is now uncertain after Prime Minister Justin Trudeau emerged from a meeting with Premier Li Keqiang Monday to announce the two countries will merely keep exploring whether to launch negotiations.

It had been widely anticipated that Canada would become the first Group of Seven country to commence free trade talks with China. China's ambassador to Canada earlier this fall predicted a decision shortly and business leaders publicly anticipated that Mr. Trudeau's December trip to China was planned with this in mind.

Speaking later to reporters Monday, Mr. Trudeau declined to reveal what topics stalled free trade talks.

He said Canada was holding out for a better deal with China.

"The deals we move forward on will be in Canada's interest and I think Canadians expect we do the work to ensure the trade deal we embark upon are going to be the right one for Canadians."

The prime minister, however, declined to identify what sticking points are standing in the way of Canada-China free trade talks.

He also broadly suggested Canada wants a more ambitious deal. One of the criticisms levied at the trade deals signed by China to date is that they are not far reaching, and while they cut tariff barriers they do not address the non-tariff barriers China is known to deploy against foreign imports.

"There wasn't one specific issue," Mr. Trudeau said when asked what is holding up the launch of talks. "There is a coming together on the sense this is going to be a big thing not a small thing."

He declined to name the obstacles stopping Beijing and Ottawa from commencing negotiations.

Mr. Trudeau nevertheless predicted Canada would one day start such talks – a day that will not apparently come during his trip to China this week.

"This will be a significant trade agreement that we will eventually move towards because of the scale of the Chinese economy."

The prime minister provided no timeline for what might happen next, except to say Canada and China will continue exploratory talks.

He hinted, but did not confirm, that the Liberal government's pursuit of chapters in trade deals that involve matters such as gender, the environment and labour could also be holding up talks.

The Canadian government appears conscious of the fact that as a major industrialized economy and a member of the Group of Seven club it could set a bad precedent for future trade deals if it agrees to a low-ambition scale of talks.

"China is very aware that this is a precedent as they move forward with the first trade deal with a G7-country and there is a desire to make sure we get it right," the prime minister said.

Signs that something was wrong emerged throughout the day in Beijing, with Canadian political staffers and diplomats unable to confirm a schedule, or whether the two leaders would take questions.

The meetings between Mr. Trudeau and Mr. Li continued longer than expected. Moments before they emerged from those talks, staffers announced that there would be no questions.

"We will continue to work on the FTA — that is, exploratory talks or a feasibility study," said Mr. Li.

"China is open to such talks," he added.

The two countries have, however, expressed differing views on the scope of a trade agreement, with Beijing interested in a more pared-down deal similar to what it has with Australia, and Ottawa pushing for a comprehensive, modern treaty.

Mr. Trudeau will remain in China for several days, and is scheduled for dinner meetings with both Mr. Li and Chinese president Xi Jinping.

Canada is "continuing work towards a comprehensive trade agreement with China, because greater market access for Canadian businesses means stronger business growth and more jobs for the middle class," he said.

Beijing has long sought Canada's presence at the free trade negotiating table in part because such talks would grant it fresh leverage to convince other Group of Seven countries to follow suit. China has signed deals with jurisdictions ranging from Australia to Peru to Iceland and last week wrapped up an agreement with the Palestinian Authority.

Launching free trade talks with China was supposed to be part of a pivot toward Asia as economic relations with the United States sour.

Mr. Trudeau, who once professed admiration for China's "basic dictatorship" because it allows the Chinese to "turn their economy around on a dime," has for some time set his sights on closer alignment with Beijing. His outreach is meant to undo the damage that business leaders and analysts said Stephen Harper caused to Sino-Canadian ties by a more standoffish and hawkish approach. Earlier this year the Trudeau government broke with the United States to join the China-led Asian Infrastructure Investment Bank, a counterpart to the U.S.-led World Bank.

Today, tense trade relations with the United States make it all the more imperative for Mr. Trudeau to seek out new markets for Canadian business. The protectionist Trump administration is trying to rewrite the The North American free-trade agreement in ways that would undermine the advantages Canada gains from the economic pact that governs this country's top trading relationship. The future of NAFTA remains in doubt after Canada and Mexico flatly rejected several U.S. negotiating demands they described as unreasonable.

Proponents argue that the reciprocal gains from allowing China greater access to Canadian markets are too good to pass up. A report by the Canadian Chamber of Commerce released in September cites economic projections that a free-trade agreement could boost Canada's annual economic output by $7.8-billion by 2030 and generate 25,000 new jobs. Major beneficiaries would be agricultural producers and technology or fuel that helps China power itself by cleaner means such as natural gas.

China has for years pressed Canada to launch trade talks, seeking access to a major western economy with close ties to the U.S.

The Canadian business community has been less enthusiastic, saying in consultations with the Canadian federal government that the thorniest issues in trade with the authoritarian country are unlikely to be resolved by such a pact. The consultations also found concern that free trade "could lead Canada to compromise on its values" and hurt "Canadian jobs and competitiveness in certain sectors, especially mining and certain manufacturing sub-sectors."

The lack of agreement Monday suggests difficult questions remain unresolved. But it is "not disappointing," said Jiang Shan, a former head of the economics section at the Chinese embassy in Canada.

"Both sides are moving toward the right direction," he said. "Free trade is good for both sides."

Indeed, "the fact that they didn't come to any positive terms could be a very good sign. It could very well mean that both sides put their toughest issues up front, so there's no misunderstanding on the respective positions," said Robert Kwauk, Beijing managing partner for Blake, Cassels & Graydon LLP.

He supports a trade deal, so long as it is carefully negotiated. But caution is warranted, he said, because on some trade issues, one country's gain is another's loss.

"It's easy to recite the mantra of win-win," he said. "Yes, some issues are win-win. But other issues are zero-sum games."

REUTERS. DECEMBER 4, 2017. Canada's Trudeau says will keep exploring trade deal with China
Michael Martina

BEIJING (Reuters) - Canada will continue to explore a free trade agreement with China, Canadian Prime Minister Justin Trudeau said on Monday, as it weighs its options after the United States threatened to pull out of the North American Free Trade Agreement (NAFTA).

Speaking after a meeting with Chinese Premier Li Keqiang, Trudeau said if “done properly”, such an agreement would benefit both countries and strengthen the middle class.

“It’s an opportunity that makes sense for Canadian businesses,” he said at the start of a five-day trip to China. “Canada is and always has been a trading nation. But the landscape of trade is shifting and we need to adjust to it.”

Li said China remained open to exploring a free trade deal with Canada as part of joint efforts to safeguard world trade liberalization and advance globalization.

“We have an open attitude toward the process of negotiations, and an open attitude towards their contents,” Li said.

Canada is considering whether to launch talks on a free trade deal with China, which wants a trade pact similar to the ones it has with Australia and New Zealand.

But Trudeau, aware of domestic unease at the idea, is moving slowly. Although polls consistently show Canadians are split over the merits of a trade deal, Canada needs to diversify exports to offset the possible damage done if the United States pulls out of NAFTA.

Trudeau’s visit, which began on Sunday, comes as plane maker Bombardier Inc (BBDb.TO) is eager to win a breakthrough order from Chinese carriers for its CSeries jet, whose fuselage is made in China.

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

“On the agricultural front, I‘m pleased to announce the Canadian beef and pork will have greater access to the Chinese market,” Trudeau said, without elaborating.

China has been loosening restrictions on beef imports this year to feed the appetite of the country’s growing middle class for more Western food.

Trudeau said he also agreed with Li a joint statement that affirms a commitment to “mitigating the global threat of climate change” and lays out a plan for closer collaboration.

Earlier on Monday, Trudeau promoted Chinese tourism to Canada at an event held at the headquarters of China’s Twitter-like online media company, Sina Weibo.

Canada has said it will co-host a January meeting with the United States of up to 16 foreign ministers in Vancouver to produce “better ideas” to ease tensions over North Korea’s nuclear and ballistic tests.

In late November, North Korea tested its most advanced intercontinental ballistic missile yet, putting the continental United States within range and increasing pressure on U.S. President Donald Trump to deal with the nuclear-armed nation.

Li said he discussed international and regional issues with Trudeau, but did not elaborate.

Reporting by Michael Martina; Editing by Nick Macfie

BLOOMBERG. 4 December 2017. China and Canada Fail to Agree on Launching Free Trade Talks

• Trudeau pushes for ‘progressive’ chapters on gender and labor
• Delay in Beijing follows disappointment last month on TPP

A push to launch free trade negotiations between China and Canada fell flat Monday, with the nations abruptly scrapping a planned press conference and agreeing instead to extend exploratory talks.

Prime Minister Justin Trudeau signaled one sticking point was Canada’s preference for sprawling “progressive” pacts, and that the countries only wanted to launch formal talks if they were more confident a deal could be reached. It’s the second time in a month that Canada has effectively left a trade partner at the altar.

Trudeau and Chinese Premier Li Keqiang canceled their joint media availability in Beijing, with each leader instead making a brief statement pledging cooperation on climate change and clean growth. The two countries had been expected to cement their desire for a free trade agreement, though officials had said right up until the last minute no decision had been made.

“Canada is committed to moving forward on progressive trade deals that involve things like chapters on gender, on the environment, on labor,” Trudeau told Canadian reporters at a hotel late Monday, after his appearance with Li. “China is very aware that this is a precedent as they move forward with their first trade deal with a G-7 country and there’s a desire to make sure we get it right.”

Both leaders downplayed any tensions from the event, held on the first full day of Trudeau’s visit.

Sticking Points

Li said the two countries “are entering what we call a golden age in our relationship,” noting exploratory talks and feasibility studies toward an FTA will continue while alluding to an impasse. “On human rights, rule of law and some other issues we have also had discussions,” he said. “Both sides should view that, due to the different national circumstances, it is only natural that we don’t see eye-to-eye on some issues.”

The episode was reminiscent of last month’s scuttled round of Trans-Pacific Partnership talks in Vietnam, when Canada angered trading partners including Japan when it balked at finalizing a revamped deal. The TPP has nonetheless been rebranded as the Comprehensive and Progressive Trans Pacific Partnership, reflecting Canada’s push to frame trade deals within Trudeau’s domestic agenda in part to make them more palatable to voters.

Progress was nonetheless made Monday, with Trudeau saying Canada’s beef and pork producers will have greater access to the Chinese market. The two countries will also continue to work together to resolve a canola dispute after an existing deal expires in 2020.

‘High Expectations’

“I’m pleased that we’ll continue our exploratory discussions toward a comprehensive trade agreement between Canada and China,” Trudeau said alongside Li in the Great Hall of the People. The Canadian leader told reporters afterward the two countries only want to proceed if they can meet the “high expectations” that launching talks would create.

“There wasn’t one specific issue -- there’s a coming together on the sense that this is going to be a big thing, not a small thing,” Trudeau said.

Canada is seeking to diversify trade away from the U.S., and that effort intensified after the Trump administration threatened to tear up the North American Free Trade Agreement if it couldn’t wring concessions from Canada and Mexico. Negotiations on a revamped Nafta deal have been extended into next year.

— With assistance by Chris Fournier, Peter Martin, Josh Wingrove, and Brendan Scott

TOURISM

PM. December 4, 2017. Prime Minister Trudeau welcomes upcoming Canada-China Year of Tourism Beijing, China 

The Prime Minister, Justin Trudeau, today visited the headquarters of a top online media company in Beijing, China – Sina Weibo – where he promoted Canada as a premier destination for Chinese tourists. Joined by Chinese youth, he also highlighted the celebrations that will be held in both countries during the 2018 Canada-China Year of Tourism.

Canada and China enjoy strong and longstanding cultural and people-to-people ties. Growing tourism between our two countries will deepen our commercial relationship and create good, well-paying jobs for Canadians while growing our middle class for years to come.

Our government is working closely with Canadian businesses and communities to ensure they are prepared to welcome an increased number of Chinese tourists during the Canada-China Year of Tourism and beyond.

Events and celebrations that showcase Canadian and Chinese cultures will be held in both countries next year. The Prime Minister also announced that Canada will host the Canada-China Year of Tourism closing ceremonies next fall in China and that China will host the opening ceremonies next spring in Canada.

Quotes

“The Canada-China Year of Tourism is an exceptional opportunity to strengthen the people-to-people connections between our two countries and celebrate the best that Canada and China offer the world. It will grow our tourism sector, which means more middle class jobs for Canadians and better economic growth for communities across the country.”

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

“Canada and China are united by strong people-to-people ties and a long history of cooperation. I am happy to join Prime Minister Trudeau and my colleagues today to announce the next steps on the Canada-China Year of Tourism, which will offer a unique opportunity to share our respective rich cultures, amazing attractions and unforgettable experiences. We are committed to working together with our Chinese partners to create memorable experiences that keep visitors coming back to Canada time and again.”

— The Hon. Bardish Chagger, Minister of Small Business and Tourism, and Leader of the Government in the House of Commons

Quick facts

• China is one of Canada’s fastest-growing tourism markets and our third-largest source of tourism. Nearly 610,000 Chinese tourists visited Canada in 2016, an increase of more than 20% on average each year since 2011, and spent an estimated $1.25 billion. That number is expected to grow significantly over the next four years.
• Canada’s tourism industry is a key economic driver, and employs one in ten Canadians.
• Over five per cent of Canada's population has Chinese ancestry, and Mandarin and Cantonese are Canada's third and fourth most widely spoken languages.

See also:

• Prime Minister to strengthen bilateral and commercial ties on trip to China: https://pm.gc.ca/eng/news/2017/11/26/prime-minister-strengthen-bilateral-and-commercial-ties-trip-china
• 2018 will be the year of Canada­­–China tourism: https://www.canada.ca/en/innovation-science-economic-development/news/2016/09/2018-will-year-canada-china-tourism.html?wbdisable=true

Canada-China Relations: http://www.canadainternational.gc.ca/china-chine/bilateral_relations_bilaterales/index.aspx?lang=eng&_ga=2.56003307.1168694504.1511191876-108037952.1511191871

NAFTA

The Globe and Mail. 4 Dec 2017. OPINION. There’s still a path forward for NAFTA renegotiations. The U.S. can benefit from exploring landing zones on proposals with Canada and Mexico on which all three can agree
WENDY CUTLER

Canada and Mexico need to determine on which of the issues to offer meaningful counterproposals and on which issues to insist on more movement from the United States before they engage. They also are likely counting on the U.S. business community and Congress to help temper U.S. positions.

The renegotiations of the North American free-trade agreement (NAFTA) are approaching a fish or cutbait moment. The talks to update the 23-year-old trade deal between Canada, Mexico and the United States, launched in August, have become remarkably difficult.
U.S. Trade Representative Robert Lighthizer’s frustration was in plain view after the latest round of negotiations, when he questioned the willingness of Canada and Mexico to “seriously engage on provisions that will lead to a rebalanced agreement.”
It didn’t have to be this way. At the outset of trade talks, while negotiators are still relatively eager and optimistic, there is usually ample room to put forth proposals, narrow differences and make progress.
The NAFTA negotiations also had a head start. Canada, Mexico and the United States all participated in the TransPacific Partnership (TPP) talks and shared much common ground on issues such as competition policy, digital trade, labour and small and medium-size enterprises.
It’s true that over time any trade negotiation gets tougher as the initial enthusiasm to strike a deal wears off and reality sets in. Negotiators tire of each other, and face mounting criticism at home. Their ability to continue to make progress is stymied. Even issues that should be noncontroversial become contentious.
The NAFTA negotiations have reached this difficult phase more quickly than usual, thanks to a series of controversial proposals submitted by the United States in such areas as automotive rules of origin, government procurement, dispute settlement and a five-year termination clause.
These proposals are serious departures from previous trade agreements. They are not based on shared objectives of the three parties, but rather on the Trump administration’s “America First” approach and the belief that NAFTA needs to be “rebalanced” in the United States’ favour.
The United States, for example, seeks to guarantee that at least half of the NAFTA automotive production take place in the country, with no regard for existing production networks. Canada and Mexico seek more opportunities to bid on U.S. government contracts, while the Americans want to reduce current access to this market. U.S. proposals would mean that dispute-settlement decisions could be ignored, and that the entire agreement would automatically end in five years, unless all three countries affirmatively decide otherwise.
I’ve negotiated deals where the United States has put forward objectionable proposals that led the other side to walk out of the room, telling us to come back when we were serious. Canada and Mexico have wisely decided to remain at the table for now, doing their best to engage where they can in trying to find a mutually agreeable landing zone. Perhaps they don’t want to give the administration an excuse to withdraw from the agreement.

Canada, for example, has sought to understand the thinking and mechanics behind the U.S. automotive proposal, while sharing why it believes that the U.S. proposal would work against American interests. Mexico put forward a counterproposal welcoming a five-year review but with no mention of automatic termination.

Very soon, however, the negotiating teams will find that they have less and less to talk about until the fate of the most controversial issues becomes clearer. Canada and Mexico need to determine on which of the issues to offer meaningful counterproposals and on which issues to insist on more movement from the United States before they engage. They also are likely counting on the U.S. business community and Congress to help temper U.S. positions.
The United States, in turn, needs to decide whether it’s prepared to engage in a give-and-take on the difficult outstanding issues, or whether it’s only willing to entertain minor tweaks. If the latter, it’s hard to see how this negotiation ends in a good place.
I do not believe the United States put forward these proposals with the objective of sabotaging the talks, as some have suggested. I do believe that the United States seriously believes in the merits of its approach. But instead of insisting on a “my way or the highway” approach, the United States can benefit from exploring landing zones on these proposals with Canada and Mexico on which all three partners could agree.
Failing to do so would not be in the United States’ best interest. It’s hard to see how other trading partners such as Japan, who are closely watching these talks, would raise their hands to negotiate bilateral deals that the administration is favouring. As a result, the United States would be on the sidelines as other countries continue to negotiate improved market access among themselves.
No matter how severe the U.S. NAFTA proposals may be, with creativity, pragmatism and flexibility, mutually agreeable outcomes can be found. Mexico’s recent counterproposal for a five-year review without termination, for example, is a good step in this direction. The United States should continue to “fish” with its North American partners and “not cut bait.” After all, as neighbours, we are all in the same boat.

ENERGY

REUTERS. DECEMBER 4, 2017. U.S. regulator raises concerns about weights on energy pipelines
Nia Williams, Valerie Volcovici

CALGARY, Alberta/WASHINGTON (Reuters) - A U.S. regulator’s preliminary investigation into the biggest oil pipeline spill this year has raised a red flag that could trigger an extensive and costly inspection of tens of thousands of miles of underground energy lines.

The 5,000-barrel leak on TransCanada Corp’s (TRP.TO) Keystone pipeline on Nov. 16 in South Dakota might have stemmed from damage caused by a weight put in place when it was built in 2008, the Pipeline and Hazardous Materials Safety Administration said in a report published on Tuesday.

Weights are used to prevent pipelines from moving and reduce the risk of damage or ruptures when water tables rise.

The regulator’s finding has implications for the 2,687-mile (4,324 km) pipeline and others throughout the world. The weights, which tip the scales at 7,000 pounds (3,175 kg) or more, are commonly used, but only the pipeline operators know where they are located.

Damage from weights “could happen on other segments of this pipeline and other pipelines,” said Najmedin Meshkati, professor of civil and environmental engineering at the University of Southern California.

The Keystone pipeline carries 590,000 barrels per day from Alberta’s oil sands to U.S. refineries. TransCanada’s proposed Keystone XL line would add another 830,000 bpd of capacity.

Nebraska officials approved the construction of that line even after the leak, although it is still unclear if TransCanada will build it.

Depending on the results of the full investigation, construction plans for new lines such as the Keystone XL may need modification. Existing lines may also have to be checked, a difficult and potentially expensive undertaking.

U.S. regulators do not have specific information on the types of weights or their locations because pipeline companies are not required to submit data, said Carl Weimer, executive director of the non-profit Pipeline Safety Trust.

PHMSA did not respond to requests for comment on this question.

The Canadian Energy Pipeline Association also said operators, not regulators, keep tabs on this information. ”We would not have an inventory; that would need to come from the individual companies,” said Carla Beynon, a spokeswoman for the industry group.

On Tuesday, PHMSA ordered TransCanada to clean up the site and analyze data on the location of other weights on the Keystone line where the land may have similar characteristics as where the leak occurred. TransCanada would not say how many weights were placed along the pipeline, which runs through several states and Canadian provinces, during construction.

In one of those states, the North Dakota Public Service Commission, which regulates pipelines, has asked for briefings with TransCanada on its monitoring procedures. Commissioners are also waiting to see the full PHMSA report and results of testing on the damaged section of pipeline.

“If there are issues on how this pipeline was designed and constructed, we will certainly be concerned,” said commission Chairman Randy Christmann.

STANDARD PROCEDURES

Using weights made of sand, gravel or concrete is standard, pipeline companies and industry representatives said.

“This is the first time I’ve heard of this type of issue causing an incident,” said Association of Oil Pipe Lines spokesman John Stoody.

A handful of companies, including PipeSak Pipeline Products & Services and Keymay Industries, manufacture bagged weights filled with gravel or permeable textiles, but pipelines built before 2009 like Keystone would probably have 7,000-to-9,000-pound concrete weights.

The Keystone line’s coating may have been scratched during installation, which could have led to corrosion, said PipeSak President Geoff Connors.

Weimer, the Pipeline Safety Trust director, said problems during Keystone’s construction, when ditches filled up with water, signaled that weighting was needed in those places.

“We are hoping more information gets released about how prevalent the weights are,” he said.

The 5,000-barrel leak came just days before regulators in neighboring Nebraska approved a route for the long-delayed and controversial Keystone XL pipeline.

XL opponents, who have campaigned against the pipeline on concerns that a spill could pollute areas vital to Nebraska’s agriculture industry, said the PHMSA report reinforced those worries.

“This has implications for XL, which crosses over the Ogallala aquifer and would require similar construction,” said Anthony Swift, director of the Natural Resources Defense Council environmental group’s Canada Project.

TransCanada did not say whether it would use a similar practice of weighting for the XL.

Crystal Rhoades, one of two Nebraska Public Service commissioners who voted against the last permit needed for Keystone XL, said the commission had no jurisdiction over safety issues and therefore probably could not revoke TransCanada’s permit or request additional conditions on the pipeline.

Former TransCanada engineer Evan Vokes, a whistleblower, said spills occurred due to shoddy or outmoded construction techniques. He said little could be done to prevent leaks once weights are installed if they are not built in the right places.

“The time to address this is when you put it in the ditch,” he said.

“It’s a pointless exercise to fix it afterwards. It’s like putting on a helmet and running through a shooting range.”

Additional reporting by Catherine Ngai in New York; Editing by David Gaffen, Simon Webb and Lisa Von Ahn

AVIATION

THE GLOBE AND MAIL. DECEMBER 4, 2017. Bombardier’s Belfast site tapped to build new Airbus engine component
NICOLAS VAN PRAET, MONTREAL

Bombardier Inc. says its Belfast, Northern Ireland site has been chosen to build a new engine component for Airbus Group SE's A320neo airliner.

The site, part of Bombardier's aerostructures and engineering services unit, will develop and manufacture a new thrust reverser for engine nacelles on Airbus's Pratt & Whitney-powered A320 planes. No financial details were disclosed.

The contract will provide a boost to Bombardier's effort to built out its aerostructures business, a $1.7-billion-a-year unit that supplies complex metallic and composite structures and components for the Montreal-based plane maker and other clients.

Roughly three quarters of the unit's volume currently consists of in-house manufacturing for Bombardier aerospace programs such as the Global 7000 luxury jet and C Series commercial airliner. One quarter comes from external customers, including Airbus. The EBIT margin on work in the latest quarter (before special items) was 9.3 per cent.

"The question that is on our mind is how do we further grow volume at aerostructures," Bombardier Chief Executive Alain Bellemare said on the company's Nov.2 earning call. "We want to create more value because we have great capabilities."

Airbus might provide one path.

The European plane maker and Bombardier announced a deal Oct.16 that will see Airbus win control of Bombardier's C Series program in exchange for providing its global marketing and procurement power. Bombardier has said it believes Airbus's involvement will double the value of the C Series program, merely on manufacturing cost and after-market support.

"We are delighted to have been selected as a supplier on this new nacelle, which will enable us to build on the relationship we already have with Airbus," Stephen Addis, vice-president of customer services and programmes for the aerostructures unit, said in a statement Monday.

Bombardier shares rose 2 cents to $3.11 in Monday morning trading on the Toronto Stock Exchange. They have gained nearly 32 per cent since the Airbus deal was announced.

INDUSTRY

REUTERS. DECEMBER 4, 2017. Canadian auto sales could hit 2 million in 2017: industry group

(Reuters) - Canadian auto sales dipped 1.2 percent in November from last year but could hit the two million milestone for the first time, according to data released by an automotive industry research firm.

About 158,653 vehicles were sold in the month, bringing the total number of units sold to 1.9 million so far this year, according to a report published by Desrosiers Automotive Consultants Inc on Monday.

“The average sales total for November and December for the last ten years is just a little under 243,000 units ... to be fair, nothing over the last few years has been average, when it comes to sales results,” Brian Murphy, Vice President of Research and Editorial at Canadian Black Book said, commenting separately from the report on Canadian auto industry sales.

On a year-to-date basis, auto sales have risen 5 percent, with trucks making for over two-thirds of all the vehicles sold in Canada.

However, the top three automakers in Canada reported a drop in November total sales.

On Friday, General Motors Co reported a 17.2 percent decline, while Ford reported a 2.8 percent drop in total sales for the month. Ford was the top selling automaker for November in Canada. [nL3N1O14S7]

Fiat Chrysler Automobiles, maker of Dodge and Chrysler vehicles, sold 19,054 vehicles for the month, a 7.8 percent drop from a year earlier.

Reporting by Ahmed Farhatha in Bengaluru; Editing by Bernard Orr

HONDURAS

Global Affairs Canada. December 2, 2017. Statement by Minister of Foreign Affairs on the situation in Honduras. Statements

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

“Canada is deeply concerned about reports of escalating tension and violence since Honduras’s national elections held on November 26, 2017, including the suspension of some constitutional guarantees on December 1st. 

“Noting ongoing delays in the publication of final, definitive election results, Canada insists on the need for election authorities to complete the vote count without interference. Canada also calls for calm and urges all parties to resolve any disagreement peacefully, transparently and in line with the highest democratic and human rights standards. Participatory, transparent and credible electoral processes are cornerstones of democracy.”

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