CANADA ECONOMICS
US
The Globe and Mail. 1 Dec 2017. Tillerson to be replaced, report says. State Secretary has been undermined by his boss throughout most of his tenure – unprecedented in U.S. foreign policy
ADRIAN MORROW, WASHINGTON
The first time Rex Tillerson met Donald Trump, the Texas oilman walked away with the job of secretary of state. It was all downhill after that.
In his 10 months as top diplomat for the world’s most powerful country, Mr. Tillerson has seen his mercurial boss undermine him on Twitter during the tense standoff over North Korea’s missile launches; publicly contradict him on a blockade of Qatar by other Middle Eastern countries; and disregard his advice on everything from the Paris Agreement on climate change to the Iran nuclear deal.
Things got so bad last summer that Mr. Tillerson reportedly referred to the U.S. President as a “moron” following a Pentagon meeting.
The man who spent a decade running Exxon Mobil, one of the world’s largest oil companies, has spent nearly his entire time in Washington facing rumours about his imminent ouster from office.
On Thursday, The New York Times, citing “senior administration officials,” reported the White House had a plan to dump Mr. Tillerson within the next few weeks and replace him with U.S. Central Intelligence Agency director Mike Pompeo. Asked about Mr. Tillerson at an unrelated Oval Office photo-op, the President did not deny he planned to axe him, replying only: “He’s here. Rex is here.”
If Mr. Tillerson soon finds himself shown the door, it will cap an unprecedented period in U.S. foreign policy, in which the Secretary of State found himself regularly presenting a completely different message to the world than the President he serves. Mr. Tillerson has repeatedly tried to steer the administration closer to the mainstream of global foreign policy, only for Mr. Trump to intervene and pull it back to the fringes.
“It’s dangerous for a secretary of state to have so little credibility [when] speaking on behalf of the President and the U.S. government, whether it’s in diplomacy with our allies or our adversaries,” Matthew Waxman, a former senior official at the State and Defence departments during the George W. Bush administration, wrote in an e-mail. “It could lead to misunderstanding and escalation of a crisis; it could undermine confidence in assurances or threats by the Secretary of State; during a crisis it could lead other governments to discount what the Secretary of State says, and it could create confusion within the U.S. government.”
In September, after Mr. Trump and North Korean dictator Kim Jong-un traded threats of nuclear annihilation, Mr. Tillerson tried to de-escalate by offering to talk to Pyongyang. But the President swiftly smacked him down. “Save your energy Rex, we’ll do what has to be done!” he tweeted.
In the spring, as Mr. Tillerson sought to mediate between Qatar and its regional rivals, Mr. Trump declared the blockade “necessary” because Doha was a “funder of terrorism at a very high level.”
And the pair regularly sing from different song sheets on international obligations: Mr. Tillerson says the United States will stay in the Iran deal (Mr. Trump has toyed with leaving it); might not withdraw from the Paris Agreement (Mr. Trump has said he will); and will stand by its long-time commitment to defend NATO allies in the event of invasion (Mr. Trump has often been ambivalent).
Jordan Tama, a foreign-policy expert at American University in Washington, said disagreements have historically arisen between the State Department and the White House from time to time: Hillary Clinton and John Kerry, for instance, favoured more intervention in Syria than Barack Obama did; William Rogers, Richard Nixon’s first secretary of state, was largely cut out of Henry Kissinger’s planning for the opening to China. But the public nature of the current discord is unique.
“It’s very problematic to conduct diplomacy with foreign leaders when the foreign leaders can’t trust that what Tillerson tells them isn’t going to be reversed,” Prof. Tama said.
Mr. Tillerson is hardly the only figure in Trumpworld to try to moderate the President’s impulses – Secretary of Defence James Mattis, Ambassador to the UN Nikki Haley and chief of staff John Kelly have all done so to varying degrees – but Mr. Tillerson appears to have raised Mr. Trump’s ire in a way the others haven’t.
Prof. Tama suggests this might have to do with Mr. Tillerson’s lack of a constituency of his own: While Mr. Mattis is a career soldier who commands respect within the Pentagon and Ms. Haley is seen as a prospective future president by the GOP establishment, Mr. Tillerson doesn’t have a power base in the government.
It likely also doesn’t help that Mr. Tillerson’s attempts to overhaul his department appear to have fallen flat: Career diplomats have long complained he is ignoring their advice or giving them nothing to do, while trying to run every file with a small circle of insiders.
Prof. Waxman, who now teaches at Columbia University’s law school, said Mr. Tillerson’s instinct to reform the bureaucracy is correct, but that he appears to have irreparably “botched” the process.
“I’ve never seen morale so low at the State Department and there’s a tragic drain of talent going on that will be hard to remedy,” he said.
In an interview with the Independent Review Journal last March, the Secretary of State revealed he had never met Mr. Trump before the election. During the transition period, the president-elect summoned Mr. Tillerson to Trump Tower to ask him about global affairs. At the end of the chat, Mr. Trump stunned Mr. Tillerson by asking him to join his cabinet.
“I didn’t want this job. I didn’t seek this job,” Mr. Tillerson told the IRJ. “My wife told me I’m supposed to do this.”
BLOOMBERG. 1 December 2017. Tillerson Faces ‘Death Blow’ After Repeated Clashes With Trump
By Nick Wadhams and Jennifer Jacobs
- White House gives tepid defense after talk he’ll be ousted
- Tillerson-White House communications broke down over summer
Time is quickly running out for U.S. Secretary of State Rex Tillerson.
America’s top diplomat heads to Europe next week hobbled by reports that the White House is preparing to oust him. On stops in Brussels, Vienna and Paris, he’ll face foreign leaders who will do their best to express comity but also wonder how much longer he’ll remain in the job.
Tillerson on Friday dismissed reports that the White House is seeking to oust him as “laughable.” But privately, administration officials said Thursday that the president is considering replacing Tillerson with CIA Director Mike Pompeo. Even publicly, officials offered a tepid defense of the secretary of state, while President Donald Trump sidestepped the question entirely.
“I think it’s a death blow,” Thomas Wright, director of the Center on the United States and Europe at the Brookings Institution, said Thursday. “The secretary of state is only powerful in the sense that he’s a voice for the president or the administration, and what they did to him today is just devastating.”
The position he’s in should feel familiar to a secretary of state whose statements have been undermined frequently over his 10 months in office on key issues from North Korea to Qatar. But now, with doubts about whether he’ll even finish this year in his post and reports that Pompeo is poised to replace him, Tillerson will be weakened as he never was before.
‘Two Voices’
The administration’s foreign policy team seems “to be working with two voices, that of President Trump’s Twitter voice and the rest of the administration, so credibility of cabinet members and their negotiating power is always an issue,” said James Norton, a former deputy assistant secretary of Homeland Security under President George W. Bush.
Relations between White House staff and Tillerson’s inner circle have been broken since the summer, when the two sides all but stopped talking, according to one of the officials, all of whom asked not to be identified discussing internal issues. That dysfunction extended to the president, who soured on Tillerson after a promising first few months in office when the two men frequently dined together at the White House.
Publicly, administration spokeswomen declined on Thursday to say Trump has full confidence in his top diplomat. White House press secretary Sarah Sanders told reporters that “when the president loses confidence in somebody, they’ll no longer be here,” adding only that Tillerson’s “future right now is to continue working hard as secretary of state.”
Tillerson is scheduled to have lunch Friday at the White House with Trump and Secretary of Defense James Mattis ahead of the Pentagon chief’s long scheduled visit to the Middle East.
State Department spokeswoman Heather Nauert said Tillerson is continuing with a “robust” agenda and highlighted the planned European trip. White House Chief of Staff John Kelly called the State Department Thursday to say reports that Tillerson is being ousted aren’t true, Nauert said. But she, too, emphasized that Tillerson, like all administration appointees, “serves at the pleasure of the president.”
“He’s continuing with his meetings, he’s continuing with his calls,” Nauert told reporters.
Tillerson will travel to Brussels for a meeting of NATO foreign ministers and then to Vienna for a meeting of the Organization for Security and Cooperation in Europe. Officials in Europe will view Tillerson’s policy prescriptions as falling within the norm of traditional U.S. foreign policy -- but they’ll also know he probably doesn’t speak for the president.
‘Traditional’ Agenda
“Tillerson is actually very good at his core job of being a diplomat with foreigners, and he certainly is advancing what I would call a traditional foreign policy agenda,” said James Jeffrey, a fellow at the Washington Institute for Near East Studies who was previously ambassador to Iraq and went on to work under Tillerson at Exxon Mobil Corp. “The issue, though, is they want to deal with whoever delivers the policy.”
Part of the problem, White House officials have repeatedly said, has been Tillerson’s refusal to fill political jobs at the State Department. Department officials have pushed back on that complaint, saying they’ve sent lists of potential nominees to the White House only to see them rejected or ignored.
The Trump-Tillerson relationship soured over the summer, after the president’s widely criticized comments about racial protests that led to a death in Charlottesville, Virginia, and a politically charged speech he gave to a national gathering of the Boy Scouts of America, an organization Tillerson once led.
Relations worsened further in October, after Tillerson had to address reports that he called the president a “moron” following a meeting of the national security team. The secretary of state denounced the report, although he left it to Nauert to deny he’d uttered the insult. Afterward, Trump suggested staging an IQ-test contest between him and Tillerson.
Beyond differences with Trump, Tillerson has few other friends in Washington. Members of Congress from both parties and veterans of the foreign service have been alienated by his slow-moving effort to reorganize the State Department and his support for deep cuts in the department’s budget, which even Republican lawmakers said were untenable.
Short Tenure
The timing of a potential shakeup for Trump’s national security team is in flux. The president has told advisers that Tillerson might be out of his job before the end of the year, one of the people familiar with the matter said, a tenure that would be among the shortest in modern times.
The New York Times reported that Kelly had developed a plan to replace Tillerson with Pompeo and nominate Senator Tom Cotton, an Arkansas Republican, for Pompeo’s job.
Cotton spokeswoman Caroline Tabler said the senator’s focus “is on serving Arkansans in the Senate.”
A Central Intelligence Agency spokesman also declined to comment. Working in Pompeo’s favor is the close relationship he’s cultivated with Trump, delivering the president’s daily intelligence briefing in person most days.
Since beginning his tenure as CIA chief in January, Pompeo has served as a key defender of Trump’s policies, from Iran to China, so he’d be less likely than Tillerson to soften the hard edges of the president’s undiplomatic tweets and comments on foreign policy.
The new questions about Tillerson’s future come as foreign policy crises, including North Korea’s nuclear program and rising tensions between Saudi Arabia and Iran, dominate much of the White House’s agenda.
While Trump and Tillerson repeatedly clashed over policy and politics, State Department officials had described those disagreements as healthy arguments and said the president enjoyed the sparring. They long insisted that Tillerson, 65, planned to stay through the president’s first term.
‘Establishment’ Thinking
At the same time, White House officials said Trump -- who has relished upending traditional presidential and diplomatic norms -- has come to dislike Tillerson for his reserved demeanor and what’s been labeled an “establishment” way of thinking.
The two have repeatedly disagreed on policy: whether to stay in the Paris climate change accord, whether to side with Saudi Arabia in its dispute with Qatar, how hard to seek a diplomatic solution over North Korea’s nuclear program.
After Tillerson told reporters in China in October that the U.S. was talking with North Korean officials through diplomatic back channels, the president undercut him, saying on Twitter that he told his “wonderful” secretary of state that “he is wasting his time trying to negotiate with Little Rocket Man,” a reference to North Korean leader Kim Jong Un.
Nauert suggested Thursday that the intrigue about Tillerson’s future was part of a “tough game of politics” typical in Washington and that the secretary brushed it off in his “unflappable” manner.
“He doesn’t always understand and accept how Washington works,” Nauert said.
INTERNATIONAL TRADE
Global Affairs Canada. November 30, 2017. Canada’s Plan for a Shifting Centre of Gravity - Address by the the Honourable François-Philippe Champagne, Minister of International Trade, at the Toronto Region Board of Trade. Speech
Toronto, Ontario - Check against delivery. This speech has been translated in accordance with the Government of Canada’s official languages policy and edited for posting and distribution in accordance with its communications policy.
Thank you for that very warm welcome.
It’s a great pleasure to be here.
Everyone here knows that trade is critical to our current and future prosperity, so I am here to talk about our plan to grow our economy, create jobs and level the playing the field so that every worker, producer, farmer, fisher, entrepreneur and investor—both women and men—can compete and win on the world stage.
Everyone here also knows that there is no better place to do business than Canada.
We are beacons of stability and predictability at a time when businesses are clamouring to invest.
As the first country in the world to adopt a policy of multiculturalism, we have shown time and time again that a country can be stronger not in spite of its differences, but because of them.
Diversity is a fact, but inclusion is a choice. Canada has made its decision and our cities have become windows to the world.
We believe in building a clean-growth economy that is as inclusive as it is innovative.
We have simplified our business-support programs and designed strategic funds to spur innovation and support high-quality business investments.
Our world-class colleges and universities have graduated the most highly educated workforce within the OECD [Organisation for Economic Co-operation].
In the new economy, we recognize that we must have access to the best talent in the world, wherever it is.
Canada is the second-best country in the G-20 to do business, according to Forbes Magazine, with the lowest overall business costs in the G-7, underpinned by the soundest banking and legal systems in the world.
Trade is in our DNA. Canadians may be just 0.5% of the world’s population but we represent 2.5% of global trade.
A remarkable two thirds of our gross national product is attributable to exports and imports.
It is no exaggeration to say our country’s current economic prosperity depends on trade.
But to ensure our future prosperity, we must reorient ourselves and our approach.
Not since WWII has there been a more opportune time—a more critical time—for Canada to show leadership.
I believe we must all embrace the imperative of diversification and that we will only be truly successful in that endeavour if we pursue it with a more progressive trade agenda.
Now is our time.
This is about job quality. This is about opening and unleashing all of our talent so that people working hard can compete and win in the sectors of tomorrow.
This is, after all, about people.
I will explain our government’s approach to securing new opportunities, but first a word on NAFTA [North American Free Trade Agreement]. My colleague Chrystia Freeland is leading those negotiations and has been very clear: we will defend and maintain the elements of NAFTA that Canadians know are essential to our national interest.
We will always defend Canada’s national interest and Canadian values, and continue to work hard and constructively for a modernized NAFTA.
I suspect most of you have been pressed into service as well because you understand the vital link between being globally competitive in markets and our quality of life at home.
Before I get to where’s next, let me explain why we believe a progressive trade agenda is so critical. Let me explain why now, more than ever, we need to be thinking about social licence.
As Prime Minister Trudeau has said, we can’t do trade exactly the same way it was done a quarter century ago.
Too many groups, particularly women, indigenous peoples, youth and newcomers have not shared in the spinoffs that have come from free trade.
Workers, mom and pop shops, young entrepreneurs creating a product for sale online, fishers and farmers—all need to see their future in trade and to see government working hard to protect them.
As a government, we believe in levelling the playing field for them so they can compete and win too.
We need the smallest of entrepreneurs to be capable of taking that first step into markets abroad. We need everyone to have the confidence to do so.
That is why we must ensure the benefits of trade extend to the middle class—not just the wealthiest few—and why we must protect and enhance the rules-based system we helped build and on which we have relied for our prosperity.
We can improve the chances of success by including appropriate progressive elements in trade agreements. We must put people first.
It is why I was proud to be the first trade minister to introduce the first gender chapter in a trade agreement for any G-20 country (with Chile) and why we have stated clearly and unequivocally that progressive trade is the only way forward.
We cannot and will not dismiss entire parts of our economy—entire groups of people! Our diversity is what gives our economy its might.
And remember, we are the ones who helped write the rules that govern trade and we are the ones who can ensure they are updated and rewritten to ensure our future prosperity.
So now let me tell you a little more about what I mean when I say now is our time and where we should diversify.
And we start that journey from a remarkable position of strength.
With CETA [Canada-European Union Comprehensive Economic and Trade Agreement] now in force—easing trade with the EU—and with the modernization of NAFTA underway, our country today has preferential access to 1.2 billion consumers in the most lucrative markets in the world.
Our fishers are loading entire planeloads of lobster for export. Our beef and pork, canola and lumber are now being exported without tariffs. And our companies now operate as though we were physically in the EU.
In CETA, we have created a new, gold-standard agreement that will serve as a model for reinvigorated and renewed trading relationships the world over.
Where’s next?
The global economic centre of gravity is moving from west to east.
Markets in the Asia-Pacific region are quickly emerging as new economic powerhouses for trade and investment.
Asia’s share of global GDP now exceeds that of the EU and that of the United States, and it contributes more than 50% of global growth.
Asia is home to over half of the world’s population, increasingly affluent and mobile, and Canada recognizes the opportunities this offers in terms of trade, education and tourism.
Today, Asia-Pacific more broadly represents an important platform for Canadian companies.
Four of Canada’s top five trading partners, including China at number 2 (!), are APEC [Asia-Pacific Economic Cooperation] members.
Increasing trade and investment with our partners in the region is essential if we are to create long-term growth and an economy that works for the middle class.
Indeed, this is a region where a new middle class is emerging and it already numbers in the hundreds of millions.
That leads to a demand for more products but also a demand for a better quality of life.
Remember those lobsters? Well, they sold out in eight minutes on Alibaba. Planes landing with quality products and generating top dollar for Canadian fishers and producers.
To take advantage of this opportunity, we are pounding the pavement and flying into the sky to secure first-mover advantage on our terms and to level the playing field for hard-working Canadians.
That is why I was so proud to have just launched exploratory talks toward a possible future FTA [free trade agreement] with ASEAN [Association of Southeast Asian Nations].
ASEAN represents about 640 million people, or a market about twice as large as in the United States.
Together, ASEAN nations actually represent Canada’s sixth-largest trading partner, so we’ve ramped up our engagement with ambassadors now in every ASEAN country and have one permanently dedicated to ASEAN itself.
Canada is also working very hard to expand its trade and investment relations throughout the Pacific.
We are, after all, a Pacific nation.
With respect to Japan, our government has recently made some real progress toward what is now an emerging and potentially more lucrative and more viable agreement for Canadians to access this market.
Core elements were agreed, including that environment and labour rights will form crucial pillars of the new Comprehensive and Progressive Trans-Pacific Partnership, or CPTPP, and be subject to dispute-settlement mechanisms.
We have also identified pathways to work on a number of outstanding issues for Canadians and will redouble efforts with stakeholders to make sure we look out for their interests during that process.
Trade should be a march to the top, not a race to the bottom.
Now is the time to see the entire chessboard and protect every piece and see every move so we are positioned for success in not just five years’ time, but in 20 and 50 years as well.
In India, we must match the historical, cultural and people-to-people ties we have in abundance with more trade and investment.
Our bilateral trade today stands at $8 billion. I think we can do much better.
That is why Minister Bains, Minister Garneau and I undertook one of the largest trade missions in our history just two weeks ago across five cities in India.
A 150-plus strong business delegation made a visible case for doing more and the benefits that can be reaped by both sides through more investment.
I also pressed for action on the long-stalled FIPA [foreign investment promotion and protection agreements] and CEPA because we need these frameworks to ensure our success and, frankly, to deal with issues.
I know that the issue of pulse shipments has caused great concern.
We’ve had some success with short-term extensions and have a good plan to secure the long term in meeting India’s food-security needs.
I’ve reminded my counterparts on multiple occasions that this approach does not help their reputation as a commercial partner. Farmers will rotate their crops and move on.
Together with Minister MacAulay, we have raised the issue regularly and often.
On the Pacific side of South America, we have secured a pathway to enhanced membership status with the Pacific Alliance, a union of Colombia, Mexico, Peru and Chile.
North and south, east and west, Canada is securing better terms for trade, locking in crucial progressive ambitions on gender, for workers and for the environment, and we are making real headway.
Now some of you will have heard recent speculation about Canada’s relationship with the world’s second-largest economy, China.
We are still carefully weighing the challenges and opportunities, but I’d like to give you a window into the discussions we are having now.
While we do not agree on every issue, engagement with this permanent UNSC [United Nations Security Council] member on Arctic, defence (North Korea, SCS [South China Sea]), African development, stability in the region, peacebuilding and climate change is not only desirable, it is imperative.
When Canada engages the world, when it builds and deepens its relationships, we can all capitalize not only in terms of dollars and cents, but in the raising of standards that comes from engaging with our country.
Canada has always set a bar and has always sought to move the dial for human progress through engagement.
As we consider next steps—and I will be joining the Prime Minister on the trip this weekend—we must also see Canada for what it is today: a G-7 country, a principal architect of the world’s multilateral organizations, a determined peacebuilder and a beacon of stability and predictability.
We are not just 35 million people, but a market at the centre of East and West, with preferential access already—with CETA and NAFTA—to the world’s most lucrative consumer markets of 1.2 billion individuals.
The challenge we face is how best to position Canada to be in an even stronger position over the longer term.
From an economic point of view, let us be clear about what is at stake for our middle class.
Today there is over $90 billion in annual bilateral trade between Canada and China, and that is poised to double again—and again—by 2025.
That’s one billion consumers rapidly growing in prosperity and the demand for the quality products that comes with it.
With so much untapped potential—for both sides—still remaining, we are looking at whether a framework whereby issues can be addressed and where the rule of law is paramount is better than the ad hoc approach favoured by the previous government.
We are looking at whether and how to provide the tools and protections necessary so that our smaller and medium-sized companies can compete and win so we can level the playing field.
And we are already trading with China.
As an example, cranberries from the Maritimes are going gangbusters in China. We should be making that happen for every producer in every part of the country!
Nine out of 13 provinces and territories currently have China as their top five export market and of these, six now have China as their number two trading partner.
The “short-termism” of the Harper years has too many costs: when it comes to access for hardworking Canadians to be successful, protections for our workers or the defence and promotion of our values, relationships matter.
We have been holding exploratory talks and fostering ongoing stakeholder engagement and we have learned from those who have gone before us, like Australia.
We have been clear from the start with our Chinese friends, throughout exploratory talks, that should we move forward, this will take time.
Time that we will use to understand the needs and concerns of Canadian workers and families.
When it comes to trade, Canadians expect us to be resolute and steadfast in the promotion of our values abroad and in preserving and protecting our national security—all while growing our economy for the middle class and those working hard to join it.
We must see the entire chessboard and plan our moves accordingly.
As minister of international trade, I have been thinking about and focusing a lot on Asia.
Of course, there is a lot of work to do and it will take time to get right.
It will take time to deliver a comprehensive approach to the Pacific—the entire chessboard!
In order to succeed, we must stand together in our pursuit of progressive trade.
Let’s seize every opportunity. Let’s be ambitious. Let’s make trade real for people.
The global economic centre of gravity is moving from west to east.
Markets in the Asia-Pacific region are quickly emerging as new economic powerhouses for trade and investment.
Asia’s share of global GDP now exceeds that of the EU and that of the United States, and it contributes more than 50% of global growth.
Asia is home to over half of the world’s population, increasingly affluent and mobile, and Canada recognizes the opportunities this offers in terms of trade, education and tourism.
Today, Asia-Pacific more broadly represents an important platform for Canadian companies.
Four of Canada’s top five trading partners, including China at number 2 (!), are APEC [Asia-Pacific Economic Cooperation] members.
Increasing trade and investment with our partners in the region is essential if we are to create long-term growth and an economy that works for the middle class.
Indeed, this is a region where a new middle class is emerging and it already numbers in the hundreds of millions.
That leads to a demand for more products but also a demand for a better quality of life.
Remember those lobsters? Well, they sold out in eight minutes on Alibaba. Planes landing with quality products and generating top dollar for Canadian fishers and producers.
To take advantage of this opportunity, we are pounding the pavement and flying into the sky to secure first-mover advantage on our terms and to level the playing field for hard-working Canadians.
That is why I was so proud to have just launched exploratory talks toward a possible future FTA [free trade agreement] with ASEAN [Association of Southeast Asian Nations].
ASEAN represents about 640 million people, or a market about twice as large as in the United States.
Together, ASEAN nations actually represent Canada’s sixth-largest trading partner, so we’ve ramped up our engagement with ambassadors now in every ASEAN country and have one permanently dedicated to ASEAN itself.
Canada is also working very hard to expand its trade and investment relations throughout the Pacific.
We are, after all, a Pacific nation.
With respect to Japan, our government has recently made some real progress toward what is now an emerging and potentially more lucrative and more viable agreement for Canadians to access this market.
Core elements were agreed, including that environment and labour rights will form crucial pillars of the new Comprehensive and Progressive Trans-Pacific Partnership, or CPTPP, and be subject to dispute-settlement mechanisms.
We have also identified pathways to work on a number of outstanding issues for Canadians and will redouble efforts with stakeholders to make sure we look out for their interests during that process.
Trade should be a march to the top, not a race to the bottom.
Now is the time to see the entire chessboard and protect every piece and see every move so we are positioned for success in not just five years’ time, but in 20 and 50 years as well.
In India, we must match the historical, cultural and people-to-people ties we have in abundance with more trade and investment.
Our bilateral trade today stands at $8 billion. I think we can do much better.
That is why Minister Bains, Minister Garneau and I undertook one of the largest trade missions in our history just two weeks ago across five cities in India.
A 150-plus strong business delegation made a visible case for doing more and the benefits that can be reaped by both sides through more investment.
I also pressed for action on the long-stalled FIPA [foreign investment promotion and protection agreements] and CEPA because we need these frameworks to ensure our success and, frankly, to deal with issues.
I know that the issue of pulse shipments has caused great concern.
We’ve had some success with short-term extensions and have a good plan to secure the long term in meeting India’s food-security needs.
I’ve reminded my counterparts on multiple occasions that this approach does not help their reputation as a commercial partner. Farmers will rotate their crops and move on.
Together with Minister MacAulay, we have raised the issue regularly and often.
On the Pacific side of South America, we have secured a pathway to enhanced membership status with the Pacific Alliance, a union of Colombia, Mexico, Peru and Chile.
North and south, east and west, Canada is securing better terms for trade, locking in crucial progressive ambitions on gender, for workers and for the environment, and we are making real headway.
Now some of you will have heard recent speculation about Canada’s relationship with the world’s second-largest economy, China.
We are still carefully weighing the challenges and opportunities, but I’d like to give you a window into the discussions we are having now.
While we do not agree on every issue, engagement with this permanent UNSC [United Nations Security Council] member on Arctic, defence (North Korea, SCS [South China Sea]), African development, stability in the region, peacebuilding and climate change is not only desirable, it is imperative.
When Canada engages the world, when it builds and deepens its relationships, we can all capitalize not only in terms of dollars and cents, but in the raising of standards that comes from engaging with our country.
Canada has always set a bar and has always sought to move the dial for human progress through engagement.
As we consider next steps—and I will be joining the Prime Minister on the trip this weekend—we must also see Canada for what it is today: a G-7 country, a principal architect of the world’s multilateral organizations, a determined peacebuilder and a beacon of stability and predictability.
We are not just 35 million people, but a market at the centre of East and West, with preferential access already—with CETA and NAFTA—to the world’s most lucrative consumer markets of 1.2 billion individuals.
The challenge we face is how best to position Canada to be in an even stronger position over the longer term.
From an economic point of view, let us be clear about what is at stake for our middle class.
Today there is over $90 billion in annual bilateral trade between Canada and China, and that is poised to double again—and again—by 2025.
That’s one billion consumers rapidly growing in prosperity and the demand for the quality products that comes with it.
With so much untapped potential—for both sides—still remaining, we are looking at whether a framework whereby issues can be addressed and where the rule of law is paramount is better than the ad hoc approach favoured by the previous government.
We are looking at whether and how to provide the tools and protections necessary so that our smaller and medium-sized companies can compete and win so we can level the playing field.
And we are already trading with China.
As an example, cranberries from the Maritimes are going gangbusters in China. We should be making that happen for every producer in every part of the country!
Nine out of 13 provinces and territories currently have China as their top five export market and of these, six now have China as their number two trading partner.
The “short-termism” of the Harper years has too many costs: when it comes to access for hardworking Canadians to be successful, protections for our workers or the defence and promotion of our values, relationships matter.
We have been holding exploratory talks and fostering ongoing stakeholder engagement and we have learned from those who have gone before us, like Australia.
We have been clear from the start with our Chinese friends, throughout exploratory talks, that should we move forward, this will take time.
Time that we will use to understand the needs and concerns of Canadian workers and families.
When it comes to trade, Canadians expect us to be resolute and steadfast in the promotion of our values abroad and in preserving and protecting our national security—all while growing our economy for the middle class and those working hard to join it.
We must see the entire chessboard and plan our moves accordingly.
As minister of international trade, I have been thinking about and focusing a lot on Asia.
Of course, there is a lot of work to do and it will take time to get right.
It will take time to deliver a comprehensive approach to the Pacific—the entire chessboard!
In order to succeed, we must stand together in our pursuit of progressive trade.
Let’s seize every opportunity. Let’s be ambitious. Let’s make trade real for people.
FULL DOCUMENT: https://www.canada.ca/en/global-affairs/news/2017/11/canada_s_plan_forashiftingcentreofgravity.html
Global Affairs Canada. December 1, 2017. Minister Champagne announces appointment of chair of Export Development Canada board
Ottawa, Ontario - The Honourable François-Philippe Champagne, Minister of International Trade, today announced the appointment of Martine Irman as chair of Export Development Canada’s (EDC’s) Board of Directors.
Ms. Irman is vice chair and head of global enterprise banking, TD Securities, and senior vice president, TD Bank Group. She is an experienced leader in international finance. She is also a celebrated industry leader: she was named one of Women in Capital Markets Canada’s Top 40 Under 40 in 2003 and received the group’s Leadership Award in 2013.
Ms. Irman is fully bilingual and holds a Bachelor of Arts degree from Western University. She also completed the Advanced Management Program at the Wharton School and holds an Institute of Corporate Directors qualification from the Rotman School of Management.
The EDC appointment is the result of an open, transparent and merit-based selection process developed to attract high-quality candidates while reflecting gender parity and Canada’s diversity in Governor-in-Council appointments.
Quotes
“Martine Irman’s proven leadership and management experience will be tremendous assets to EDC’s mandate to provide Canadian exporters and investors with the tools they need to expand their presence in international markets. As chair, she will play a key role in EDC’s growing support for Canadian companies expanding their international trade activities and creating good middle class jobs at home.”
- François-Philippe Champagne, Minister of International Trade
Quick Facts
- Founded in 1944, EDC is a Crown corporation that operates on commercial principles and reports to Parliament through the minister of international trade.
- EDC has been facilitating the international business activities of Canadian companies both large and small, in every industry across the country for more than 70 years and has facilitated more than $1 trillion in export and investment activity.
Backgrounder - Export Development Canada
Export Development Canada (EDC) is a Crown corporation under the international trade portfolio supporting Canadian exporters in markets abroad. The minister of international trade is accountable to Parliament for the governance and performance of EDC.
The Export Development Act, which governs EDC, requires the government to appoint a chair, who holds office indefinitely. Conventionally, the chair’s term lasts four years.
The chairperson provides strategic and corporate planning and direction, implements modern corporate governance principles and best practices and serves as EDC’s interlocutor with senior government officials.
Heather Cuthbert, EDC’s vice-chair, has been acting as interim chair since July 2017.
The appointment of the EDC chair was a result of the Government of Canada’s new recruitment approach for Governor-in-Council appointments, which includes open, transparent and merit-based processes that attract high-quality candidates while reflecting gender parity and Canada’s diversity.
Export Development Canada: https://edc.trade/
CANADA - CHINA
The Globe and Mail. 1 Dec 2017. Beijing foots bill for visits to China by senators, MPs
ROBERT FIFE, OTTAWA
STEVEN CHASE, OTTAWA
XIAO XU, VANCOUVER
I wasn’t there to kowtow to them. I don’t sit here and tell the Canadian government they should roll over for the Chinese government.
LEO HOUSAKOS CONSERVATIVE SENATOR
Since 2006, parliamentarians have taken 36 trips to China sponsored by arms of the Chinese government or business groups seeking closer ties and trade with the one-party state and world’s secondbiggest economy, according to travel records kept by the Senate and House of Commons.
There are no laws banning Canadian legislators from accepting such junkets, and other countries occasionally cover the travel costs of parliamentarians who visit their countries.
But those countries aren’t trying to assert global influence for a dictatorial government. Australia and New Zealand have raised concerns about China’s attempts to gain influence, from paying for junkets of foreign politicians to making political donations. Travel records show that the Chinese People’s Institute of Foreign Affairs (CPIFA) is one of the key state agencies that regularly funds trips of foreign politicians. It finances 15 trips annually for U.S. politicians.
This institute answers to the Communist Party’s United Front Work Department, the lead agency in charge of burnishing China’s image abroad and managing the Chinese diaspora overseas. Chinese officials have called the United Front its “magic weapon” to gain economic and political influence and quell dissent at home and abroad. It funds Chinese media, culture and business associations and has established Confucius institutes at universities and pays for trips by foreign politicians, including those from Canada.
One of the biggest single users of the sponsored travel provided to Members of Parliament in recent years has been Canada’s ambassador to China, John McCallum. He took trips valued at $73,300 from China or proBeijing business groups, such as the Canadian Confederation of Fujian Associations, during the years he was a backbench MP from 2008 to 2015.
Two parliamentarians who appear to have cultivated ties to the agents of Chinese “soft power” are rookie Liberal MP Geng Tan, a chemical engineer born in Hunan province who came to Canada in the late 1990s, and Ontario Conservative Senator Victor Oh.
Mr. Oh and Mr. Tan serve on the board of the Canada Confederation of Shenzhen Associations, along with five Toronto-area city councillors. The lobby group promotes business and cultural ties with China, but its mission statement advocates the reunification of Taiwan and the People’s Republic of China.
Mr. Tan, the first Canadian born in mainland China to be elected to Parliament, was only a rookie when he managed to secure the job of co-chair of Parliament’s Canada-China Legislative Association in December of 2015, a group of MPs and senators who have an interest in building closer ties to Beijing. The group receives taxpayer funding to visit China.
But Mr. Tan and Mr. Oh have also taken private trips to China sponsored by the Chinese government and pro-Beijing business groups.
The two men have met with officials from the United Front, the Chinese People’s Political Consultative Conference, a tool of the United Front, as well as the All-China Federation of Returned Overseas Chinese, which is another organ employed to manage the ethnic diaspora living outside China.
In several instances, the trips were not declared to Parliament’s ethics officers. When The Globe and Mail raised the matter, both men explained that was because they had paid the expenses for these visits out of their own pockets.
During a visit to his home town of Changsha in July, 2017, Mr. Tan met with two top officials of Beijing’s United Front and key body, the Chinese People’s Consultative Conference (CPCC), which operate worldwide and often work through overseas Chinese associations.
He first denied ever taking the trip when approached by The Globe.
When The Globe pointed out that there were pictures of the MP in local Chinese newspapers with United Front and CPCC officials, Mr. Tan recalled that he had indeed been there but insisted he paid for the trip himself.
“It is my own trip,” Mr. Tan said. “I use that time to visit my mom and grandmom.”
During the trip, he took time for meetings with United Front representatives Da Bi Xin and Tian Huayu and CPCC chairman Wu Shuyuan and local Communist Party boss Qui Chuankai.
Asked about the meeting with United Front and its mandate to promote Chinese influence globally, Mr. Tan replied: “It is not my job to look into those factors because for me, my focus is our [Canadian] own business. I don’t care so much what they do. It is not part of my business.”
Mr. Tan said his role as an elected MP is to promote friendship between Canada and China and “mutual understanding and respect between two peoples.”
After visiting Changsha, Mr. Tan later met up with Liberals Rob Oliphant and Pam Damoff and Tory Michael Cooper, who also accepted a free trip to Beijing and Shandong, paid for by the Chinese People’s Institute of Foreign Affairs.
The Prime Minister’s Office had no comment on parliamentarians accepting free travel from China, but an official said they must declare sponsored trips, as required by the ethics rules.
The Chinese embassy in Ottawa did not respond to requests for comment.
Mr. Tan also accepted a free trip to Hunan province in April paid for by Kai Wu, a Torontobased businessman who set up an immigrant investment and education business after emigrating from Hunan province.
Mr. Wu, who is a regular donor to the Liberal Party, appeared to be unsure of what exactly he expected in return from Mr. Tan for footing the trip to China.
“I can’t remember … He didn’t help me with anything, I don’t think,” he said, explaining the Liberal MP is helping Canadian businesses.
Asked again if he remembered what Mr. Tan did to help him, Mr. Wu said, “No, he didn’t help me” and then hung up after saying he had a cold and was losing his voice.
Mr. Tan said he accepted the trip to help Mr. Wu’s Kaiyao Education Group to “attract more international students to Canada to study.” He said the trip was a good way to “help our Canadian business people to create more business in China.”
Richard Fadden, a former Canadian Security Intelligence Service director, who also served as national security adviser to Prime Minister Justin Trudeau and Stephen Harper, expressed concerns about Canadian politicians accepting undisclosed trips from China, especially if they are not part of officially sanctioned parliamentary activities.
“If they do it time after time after time and, in particular, if they are invited to trips overseas, in my mind that means that at a minimum they are getting too cozy, because no parliamentarian should get too cozy with the representatives of a foreign state,” Mr. Fadden said. “At a minimum, they are getting too cozy and at worst they are beginning to drink the Kool-Aid.”
Mr. Oh, who was appointed to the Red Chamber by Mr. Harper in 2013, is a frequent traveller to China and prominent at banquets and events in Canada where Chinese diplomats and party bigwigs are invited guests. He has accepted trips paid for by the governments of Jilin, Hainan and Hubei provinces, as well as business groups and Chinese airlines.
Mr. Oh and Senator Yuen Pau Woo, the new leader of the largest block of Independent senators, have spoken out against a motion from Conservative Senator Thanh Hai Ngo that calls on Canada to oppose China’s aggressive moves in the disputed South China Sea.
In April, Mr. Oh brought along Conservative senators Don Plett and Leo Housakos and their spouses on a two-week, allexpense paid trip to Beijing and Fujian province.
The Chinese government unfurled the red carpet for Mr. Oh when he brought his Senate colleagues to his ancestral mountain village in Fuzhou. The government went so far as to pave a high mountain path for the senators, which was used by Mr. Oh’s family before they immigrated to Singapore.
There is confusion though about who exactly paid for the trip, which was not declared to the Senate Ethics Office, as required for sponsored travel. At first, Mr. Housakos’s office said it was sponsored travel, partly paid for by China and a trade group based in Canada.
“Full disclosure, my wonderful assistant did not disclose it to the ethics office and I will file expeditiously,” Mr. Housakos said. “I didn’t intentionally not disclose this. I have never done any personal business with any Chinese entity there or in Canada.”
On Tuesday, The Globe tracked down Mr. Oh, who said there was no need to disclose the trip because his “family” personally paid all the expenses for all three senators.
Mr. Housakos, a former Senate Speaker, said the two-week jaunt included lots of meetings with cultural and commercial officials and businesses in China. He added that he raised human rights and democracy with a former general and member of the National People’s Congress.
“I wasn’t there to kowtow to them,” Mr. Housakos said. “I don’t sit here and tell the Canadian government they should roll over for the Chinese government.”
Mr. Oh and his office also declined to fully explain three other trips to China that were not publicly declared to the Senate Ethics Office. In a quick exchange on Tuesday, he said all his trips were official government business but there is no public record that this is the case.
The Globe and Mail. 1 Dec 2017. No rush on China trade deal: minister. Ottawa still ‘weighing the challenges and opportunities’ inherent to a tie-in, Champagne says as Trudeau heads to Beijing
ROBERT FIFE
STEVEN CHASE
OTTAWA - Trade Minister François-Philippe Champagne says the Trudeau government will not be rushed into concluding a bilateral free-trade deal with China even as Ottawa insists no decision has yet been made on whether to start formal negotiations with the world’s second-biggest economy.
Prime Minister Justin Trudeau travels to Beijing this weekend for talks with China’s top leaders that many in the business community expect could kick-off formal free-trade negotiations.
Canada and China have been in exploratory talks for some time, and Beijing is pressing hard to begin formal discussions. China, which has trade pacts with only a few countries, is keen to score its first trade deal with a member of the Group of 7 wealthy industrialized countries.
In a speech on Thursday setting up the China visit, Mr. Champagne said Ottawa is still “weighing the challenges and opportunities” of entering into a bilateral trade arrangement with China.
“We have been clear from the start with our Chinese friends, throughout the exploratory talks, that should we move forward, this will take time,” he said. “Time that we will use to understand the needs and concerns of Canadian workers and families.”
The Liberal government recently released the results of consultations with more than 600 businesses, academics and civil-society groups.
They said a free-trade deal with China could kill Canadian jobs, including in manufacturing, and force Canadian firms to compete against companies that have lax labour standards, lower environmental requirements and state subsidies.
A spokesman for Mr. Champagne said no decision has been made on whether to pursue such negotiations, even though many believe Mr. Trudeau is going to China to announce formal talks.
“No assumptions should be made about next week,” communications director Joe Pickerill told The Globe and Mail. “We are still weighing the complexity of the challenge, the scale of the opportunities to create jobs and the realities presented by a market like China.”
Mr. Champagne acknowledged the challenges that would be posed in launching free-trade talks with an authoritarian country that does not respect the rule of law and closes huge areas of its economy to international competitors. China’s envoy to Canada, Lu Shaye, has laid out tough conditions, saying Beijing wants Canada do away with nationalsecurity reviews of proposed Chinese takeovers of Canadian companies and to allow its state-owned enterprises to invest in broad sectors of the Canadian economy. China also objects to Canadian criticism of its human-rights record.
If talks do go ahead, Mr. Champagne assured Canadians the government would not make compromises.
“Canadians expect us to be resolute and steadfast in the promotion of our values abroad, in preserving and protecting our national security, and all the while growing our economy,” he said. “We must see the entire chessboard and plan our moves accordingly.”
In a statement announcing the trip, Mr. Trudeau’s office said the Prime Minister intends to continue frank dialogue with China on topics such as human rights and good governance.
The Canadian Coalition on Human Rights issued an open letter to Mr. Trudeau on Thursday that listed 16 prisoners in China who are either Canadian citizens or have strong connections to Canada.
Among the cases are those of Huseyin Celil, a Uyghur imam imprisoned since 2006, and Qian Sun, a Falun Gong practitioner in jail since February of this year.
Mr. Trudeau is also being urged to demand the release of John Chang and Allison Lu, two British Columbia wine merchants charged in a dispute over customs duties.
In his speech, Mr. Champagne said China, with a population of more than one billion and a rapidly expanding economy, represents enormous opportunities for Canadian businesses.
A study by the Business Council of Canada puts the value of a Chinese trade deal at $7.8-billion in new economic activity for Canada.
“There is over $90-billion in annual bilateral trade between Canada and China and that is poised to double again by 2025,” said Mr. Champagne, who noted that China is the second-largest trading partner of six provinces.
The House of Commons Foreign Affairs committee is in China now on an official trip and its chairman says it is time for many Canadians to overcome their reservations toward China, and for Mr. Trudeau to formally announce that substantive trade talks ought to get started.
“The sooner Canadians get to know China a lot better than they do, then some of the myths out there will dissipate simply because China is a more modern society than people think,” Liberal MP Robert Nault told The Canadian Press before his arrival in Beijing this week.
The Globe and Mail. 1 Dec 2017. OPINION. Why Canada must pursue a trade relationship with China
DEREK BURNEY, Derek Burney was Canada’s ambassador to the U.S. from 1989-1993. He led the Canadian delegation in concluding negotiations of the Canada-U.S. free-trade Agreement.
FEN OSLER HAMPSON, Fen Osler Hampson is chancellor’s professor at Carleton University and director of Global Security and Politics at CIGI.
While no formal announcement has been made, Prime Minister Justin Trudeau is fully expected to launch free-trade negotiations with China during his visit to Beijing next week. After more than five years of on-and-off exploration, it is time to take the plunge, recognizing that negotiations are a beginning and not the end.
China’s economic growth and its geopolitical influence are in the ascendency and cannot be ignored. The Chinese economy continues to grow at a 7-percent clip and will soon eclipse the United States as No. 1 in the world. What is also patently evident is that, by debating among ourselves, Canada has fallen behind countries such as Australia – our natural competitor in the region – leaving us as little more than a bystander observing the most consequential global change in this century.
Some have suggested that a free-trade initiative with China could imperil efforts to renegotiate the North American freetrade agreement. The primary determinant for any trade negotiation should be whether Canadian interests can be safeguarded and advanced. That is a decision for Canada alone. The engagement with China could actually provide leverage for Canada in NAFTA at a time when those talks seem inconclusive. If successful, an accord with China would, in fact, provide preferential market openings for our products and services while reducing our status as a “captive” market obliged to sell our energy resources only to the United States at a sharp discount to world prices.
A second concern is that a launch of negotiations with China may detract from efforts to salvage a mini Trans-Pacific Partnership (TPP). We should have no difficulty pursuing both. Australia is a TPP partner and also has a free-trade agreement with China. However, the government has some remedial work to do on the TPP front. Our flip flop in Vietnam has puzzled if not infuriated several Asian partners.
A different level of concern focuses on China’s shoddy record on human rights. The remarkable economic progress over the past three decades has delivered substantial benefits to the Chinese people, but without any discernible improvement in basic democratic values.
If we adopt a more rulesbased platform for trade, we will have a more credible position from which to register concerns about human rights, even though the scope for influence is narrow. The Chinese are justifiably proud of the remarkable degree to which they have improved the economic well-being, the health and the education of most of their people. There are many warts and flagrant abuses that violate basic human rights, but we can negotiate on trade without condoning practices abhorrent to us.
China, it is said, has many laws but no rule of law. Corruption is endemic, fuelled in large part by the sustained economic boom and the concentration of power among party officials. That is precisely why a mutually beneficial trade agreement with clear rules on performance and a rigorous dispute-settlement mechanism at its core makes eminent sense.
Canada’s paramount goal should be to act in its own interest by improving and safeguarding access to the burgeoning Chinese market where much of what we produce is in increasing demand. Any proposal should be examined on its actual merits, not on sentiment or wishful posturing. If we expect to reap tangible dividends from a negotiation, we will need to have infrastructure in place enabling us to sell and ship energy resources to China. The federal government will have to be more assertive exercising its national responsibility to move matters forward expeditiously.
The Prime Minister’s father favoured what was called the “Third Option,” efforts to counter-balance our vital U.S. relationship with a more strategic focus on Asia and Europe. Along with the Canada-EU Comprehensive Economic and Trade Agreement, a mini TPP and possibly bilateral negotiations with India, the prospect of a trade agreement with China would give real substance to that concept.
NAFTA
The Globe and Mail. 1 Dec 2017. OPINION. NAFTA offers the chance to establish long-overdue online speech safeguards
MICHAEL GEIST, Canada Research Chair in Internet and E-Commerce Law at the University of Ottawa, faculty of law. He can be reached at mgeist@uottawa.ca or online at michaelgeist.ca.
During the earliest days of the commercial internet, the United States enacted the Communications Decency Act, legislation designed to address two concerns with the rapidly growing online world: the availability of obscene materials and the liability of internet services hosting third-party content.
While the obscenity provisions in the 1996 law were quickly struck down as unconstitutional by the U.S. Supreme Court, the liability rules emerged as a cornerstone of U.S. internet policy.
The rules, which many regard as the single most important legal protection for free speech on the internet, establish a safe harbour that ensures online services are not liable for the content posted by their users. Over the past two decades, the CDA Section 203(c) provision has been used by every major internet service – from Google to Amazon to Airbnb – to ensure that courts, not private companies, determine what is lawful and permitted to remain online.
By creating a legal safe harbour for non-copyright thirdparty content (copyright law establishes an alternative system for addressing claims of infringement and the liability clearly applies to original content created by an online service), thousands of internet sites and services have been able to err on the side of free speech without active monitoring of posts or takedowns based on unproven claims.
The rules can be controversial, particularly at a time when policy makers and the public are demanding greater vigilance from online providers in countering disinformation campaigns, cyber-bullying and hate online. Yet, there is room to strike a balance to ensure that illegal content is swiftly identified and taken down, while avoiding the risks that would come with active monitoring of content posted by billions of users by internet giants.
Unlike the United States, Canada does not have equivalent online legal protections for thirdparty content. In practice, that has meant the same companies that require court orders prior to the removal of content for claims originating in the United States, may take down lawful content in Canada based on mere unproven allegations due to fears of legal liability. Moreover, the absence of safe-harbour protections has proven to be a significant disincentive for both new and established services to use Canada to store data or maintain a local presence.
The absence of Canadian safeharbour rules took on heightened importance this year with the Supreme Court of Canada’s Equustek ruling, in which it concluded that a Canadian court could issue a global takedown order requiring Google to remove results from its search index for users worldwide. A U.S. court recently issued an injunction blocking enforcement of the Canadian order, noting that it “threatens free speech on the global internet” by effectively overriding U.S. safe-harbour protections.
The inconsistency between U.S. and Canadian law in this area appears to have led the U.S. government to amend its list of negotiating objectives for the North American free-trade agreement’s digital trade chapter. Earlier this month, the United States released its updated list of objectives, quietly adding “establish rules that limit [non-intellectual property rights] civil liability of online platforms for third party content, subject to NAFTA countries’ rights to adopt nondiscriminatory measures for legitimate public policy objectives.”
The change may have been motivated by U.S. concerns of Canadian overreach in the online environment, but the benefits of a well-crafted provision would be significant for the Canadian digital economy. The U.S. proposal features ample room for Canada to craft rules that maintain the need for responsible stewardship of online providers without overbroad monitoring or unwarranted takedowns.
As Canada seeks to attract global players such as Amazon and foster the creation of the next generation of homegrown internet success stories like Shopify, there is a need for a level legal-liability playing field. Indeed, the absence of Canadian safe-harbour rules is a longstanding weakness in the efforts of Innovation, Science and Economic Development Minister Navdeep Bains to build an innovative online economy. The NAFTA digital-trade chapter offers an ideal venue to simultaneously give the U.S. delegation a “win” and for Canada to pursue muchneeded domestic digital reforms.
G-20
Innovation, Science and Economic Development Canada. November 30, 2017. Canada working with G20 partners to reduce excess steel production. Too much steel flooding world markets affects Canadian steelworkers and our steel industry
Ottawa - Canada’s world-class steel producers are important contributors to our economy and manufacturing supply chains. Global steel excess capacity has negatively impacted production, trade and workers in many economies, including Canada’s, and continues to do so.
To address this problem, Canada is playing an active role in the 33-member G20 Global Forum on Steel Excess Capacity (GFSEC). The GFSEC, which represents 90 percent of global steel production and capacity, has agreed to information sharing on data related to steel production, capacity and policies taken at the central government level and to concrete policy solutions in the form of six principles.
The GFSEC released a report today that details the solutions agreed to by all members to address this critical global problem.
Minister Bains congratulated Germany on its stewardship as Chair of the GFSEC and congratulated Co-Chairs China and the United States. He noted the importance of maintaining this momentum moving forward under the direction of the incoming G20 Chair, Argentina. Canada looks forward to productive sessions and continued collaboration and information sharing in 2018.
The Government of Canada will continue to work with its partners in the GFSEC to reduce excess capacity in the steel sector, to the benefit of Canadian steelworkers and the companies that they supply.
Quotes
“Canada appreciates the work of the Global Forum on Steel Excess Capacity and welcomes the policy solutions it recommends in order to encourage market function and reduce excess capacity in this sector. The report agreed to by Forum members is a testament to the collaborative efforts of G20 and other steel-producing member countries of the Global Forum to reduce the damaging effects of excess production on our respective economies.”
– The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development
“I am pleased that all major steel-producing countries have reached agreement on the principles that should guide actions to address the root causes of excess capacity and ensure a level playing field for the global steel industry and reduce trade frictions in the sector.”
– The Honourable François-Philippe Champagne, Minister of International Trade
“The Canadian Steel Producers Association would like to thank Minister Bains and the Government of Canada for their leadership throughout this important process. Global excess steel capacity has harmed domestic producers and steel workers by eroding prices and disrupting supply chains. We are encouraged by the policy recommendations adopted by the Global Forum, and we are hopeful that these measures will be transparently implemented by member countries. The positive results from this critical multilateral initiative, in addition to recent improvements to Canada’s domestic trade remedy system, represent important steps forward in ensuring the sustainability of Canada’s innovative steel industry.”
– Joseph Galimberti, President, Canadian Steel Producers Association
Quick Facts
- The steel industry is a key economic sector for Canada, employing over 22,000 Canadians and contributing $3.9 billion to Canada’s GDP in 2016. It is a key supplier to the Canadian manufacturing, energy, automotive and construction industries.
- The GFSEC was established as a result of a G20 initiative mandated by the 2016 Hangzhou Summit, which called on G20 and interested Organisation for Economic Co-operation and Development members to address global steel excess capacity.
Global Forum on Steel Excess Capacity Report: http://www.bmwi.de/Redaktion/EN/Downloads/global-forum-on-steel-excess-capacity-report.pdf?__blob=publicationFile&v=1
LABOUR
StatCan. Labour Force Survey, November 2017
- Employment — Canada: 18,569,000, November 2017; 0.4% increase (monthly change)
- Unemployment rate — Canada: 5.9%, November 2017; -0.4 pts decrease (monthly change)
- Source(s): CANSIM table 282-0087: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=2820087&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=
Employment increased for the second consecutive month, up 80,000 in November. The unemployment rate fell by 0.4 percentage points to 5.9%, the lowest rate since February 2008.
In the 12 months to November, employment was up by 390,000 (+2.1%), with all the gains attributable to full-time work (+441,000 or +3.0%) as part-time employment was down slightly. Over the same period, total hours worked grew by 1.0%.
The unemployment rate trended downwards in the 12 months to November, falling 0.9 percentage points over this period.
Chart 1: Employment
Chart 2: Unemployment rate
Highlights
In November, employment increased for women 55 and older, for youth aged 15 to 24, and for core-aged men (25 to 54). There was little change for the other demographic groups.
Employment rose in Ontario, British Columbia, Quebec and Prince Edward Island. At the same time, fewer people were employed in New Brunswick, while there was little change in the other provinces.
A number of goods- and services-producing industries recorded employment gains: wholesale and retail trade, manufacturing, educational services, and construction. On the other hand, a decrease was observed in agriculture.
The employment increase in November was largely among private sector employees, as both public sector employment and the number of self-employed were little changed.
Employment gains for older women, youth and core-aged men
In November, employment for women aged 55 and older rose by 32,000, and their unemployment rate fell by 0.5 percentage points to 4.6%. On a year-over-year basis, employment for older women was up 94,000 (+5.4%). For men aged 55 and older, employment held steady and the unemployment rate was unchanged at 6.2%. In the 12 months to November, employment for older men was up 81,000 (+3.9%).
Among workers aged 55 and older, 8 out of 10 were between the ages of 55 and 64. Their estimated year-over-year rate of employment growth (unadjusted for seasonality) was 4.1%, twice the rate of their population growth (+2.0%). In comparison, people aged 65 and older comprised a smaller share of older workers, but their proportion has been increasing over the past decade. This group had the fastest year-over-year rate of employment growth among the major demographic groups in November, rising 8.1% and outpacing their rate of population growth (+3.7%). For more information about recent trends among older workers, see Labour in Canada: Key results from the 2016 Census and "The impact of aging on labour market participation rates."
Employment for youth aged 15 to 24 increased for the second consecutive month, up 30,000 in November, bringing year-over-year gains up to 50,000 (+2.0%). In November, the youth employment rate (share of the 15- to 24-year-old population that was working) rose by 0.7 percentage points to 57.3%—continuing an upward trend that began in mid-2016. The youth unemployment rate was little changed in November at 10.8%, well below the rate of 12.9% recorded 12 months earlier.
Employment also increased for core-aged men, up 27,000 in November. With more of them working and fewer searching for work, their unemployment rate fell by 0.6 percentage points to 5.0%—the lowest rate since May 2008. In the 12 months to November, employment for men aged 25 to 54 was up 81,000 (+1.3%).
Ontario leading employment growth
The lion's share of national employment growth in November was recorded in Ontario, with 44,000 more people employed, mostly in wholesale and retail trade as well as in manufacturing. The unemployment rate fell by 0.4 percentage points to 5.5%, the lowest rate since July 2000. Ontario has seen a downward trend in the unemployment rate since the start of 2016. Year-over-year employment gains in the province totalled 181,000 (+2.6%), all in full-time work.
In British Columbia, 18,000 more people were employed in November, bringing year-over-year gains to 92,000 (+3.8%), mostly in full-time work. The unemployment rate was 4.8% in November, little changed from the previous month, though still the lowest among the provinces.
Employment in Quebec grew for the second consecutive month, up 16,000 in November. Most of the increase was in manufacturing and construction. With more people employed and fewer searching for work, the unemployment rate fell by 0.7 percentage points to 5.4%, continuing a notable downward trend that began at the start of 2016. The November unemployment rate in Quebec was also the lowest recorded since January 1976—when comparable data became available. In the 12 months to November, employment gains in the province totalled 78,000 (+1.9%), all in full-time work.
In Prince Edward Island, 1,400 more people were employed in November, reducing the unemployment rate to a record low of 8.8% (-1.5 percentage points). In the 12 months to November, employment gains in the province totalled 2,500 (+3.5%).
Following gains in October, employment in New Brunswick fell by 2,700 in November, all in part-time work. The unemployment rate increased 0.5 percentage points to 8.3%. Compared with 12 months earlier, employment in the province was little changed.
Employment in Alberta held steady in November, and the unemployment rate fell by 0.5 percentage points to 7.3% as fewer people looked for work. Year-over-year employment growth in the province totalled 34,000 (+1.5%), all in full-time work.
Chart 3: Unemployment rate by province, November 2017
Employment gains in both goods- and service-producing sectors
In November, 39,000 more people were employed in wholesale and retail trade, offsetting the decrease in October. In the 12 months to November, employment in this industry was up by 82,000 (+3.0%).
Employment in manufacturing increased by 30,000, bringing year-over-year gains to 91,000 (+5.4%). Employment in this industry has been trending up since the start of 2017. Growth in the 12 months to November was spread across several subsectors such as electrical equipment, appliance and component manufacturing as well as printing and related support activities.
In educational services, employment rose by 21,000 in November but was little changed from 12 months earlier.
Employment in construction increased for the second consecutive month, up 16,000 in November. This brings year-over-year gains to 50,000 (+3.6%). Employment in this industry has been trending up since the summer of 2017.
On the other hand, the number of people employed in agriculture decreased by 5,800, offsetting an increase the previous month. After trending downwards since the autumn of 2013, employment in agriculture has been virtually unchanged since the spring of 2017.
The number of private sector employees increased by 72,000 in November, while both public sector employment and the number of self-employed were little changed. Compared with 12 months earlier, the number of private sector employees rose by 218,000 (+1.8%), while public sector employment rose by 88,000 (+2.4%) and self-employment was up by 85,000 (+3.1%).
Chart 4: Average usual weekly work hours of people aged 25 to 54, by sex and presence of children in the household, Canada, 1976 to 2016
FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/171201/dq171201a-eng.pdf
THE GLOBE AND MAIL. DECEMBER 1, 2017. ECONOMY. Canada’s jobless rate hits lowest since 2008 as hiring spikes
JOSH O’KANE
Full-time work has driven a year's worth of job gains in Canada, pushing November's unemployment rate to the lowest in nearly a decade.
Canada's unemployment rate sank to the 5.9 per cent in November from 6.3 per cent in October, thanks to 79,500 new jobs. That rate is the country's lowest since February 2008, months before the Great Recession took its toll on the economy. While Statistics Canada's month-to-month labour force survey data tends to be volatile, the agency said the country had added 390,000 jobs over the 12 months through November, up 2.1 per cent, entirely attributable to 441,400 new full-time jobs.
Economists were quick to praise the hiring numbers. "It was the largest monthly increase in more than five years, and marked the 12th consecutive gain – an unusual streak that speaks of durability," said Sal Guatieri, senior economist with Bank of Montreal Capital Markets, in a research note.
Royal Bank of Canada economist Josh Nye described the job growth as reaching the stratosphere – but pointed to the average hourly wage growth of 2.7 per cent year-over-year as a sign that might stir Canada's central bank.
"If that trend holds up it will be hard for the Bank of Canada to remain on the sidelines much longer," he wrote in a note. "Our forecast assumes the bank will raise rates again in April when they have more information on NAFTA renegotiation and how households are handling this year's rate hikes. If anything, today's blockbuster employment report raises the risk of an earlier move."
The demographics that saw the greatest job gains in November were women aged 55 or older, youth aged 15 to 24, and "core-aged" men aged 25 to 54. A number of industries helped drive job growth last month, including wholesale and retail trade, manufacturing, educational services, and construction; agricultural jobs, however, took a hit.
Ontario was Canada's job-gains leader, employing 44,000 more people, boosted largely by manufacturing and wholesale and resale trade; the province's unemployment rate was 5.5 per cent, its lowest since July 2000, Statistics Canada said. In adding 16,000 jobs, primarily in manufacturing and construction, Quebec's unemployment rate fell to 5.4 per cent – the lowest on record since the agency began collecting comparable data in 1976.
British Columbia and Prince Edward Island also saw gains, while other provinces, including Alberta, had little fluctuation. New Brunswick, which has long struggled to keep people working, lost 2,700 jobs last month.
BLOOMBERG. 1 December 2017. Red-Hot Jobs Market Gives Unexpected Boost to Canada’s Economy
By Greg Quinn and Theophilos Argitis
- Unemployment rate falls below 6% for first time since 2008
- Consumption strong as exports slow GDP growth to 1.7 percent
Canada’s economy is showing unexpected resiliency in the second half of the year despite slumping exports, driven by the strongest job market since the 2008-2009 recession.
The jobless rate plunged to 5.9 percent in November as employers added another 79,500 workers during the month, bringing gains over the past 12 months to nearly 400,000, Statistics Canada said Friday from Ottawa. The increased employment is helping to fuel household spending, a separate report showed. Economic growth in the third quarter slowed to an annualized 1.7 percent on a sharp drop in exports, but the decline was tempered by stronger-than-expected consumption.
The data indicates an expected slowdown for Canada’s economy in coming quarters may be less severe than anticipated, raising the prospect of faster interest rate increases by the Bank of Canada. The Canadian dollar jumped as much as 1 percent on the reports.
“All told, some great numbers on the monthly GDP front and on jobs, which should support the loonie and dent fixed income,” Nick Exarhos, an economist at CIBC Economics, said in a note to investors.
Both the employment gain and jobless figure in November beat the consensus economist forecasts for a 6.2 percent unemployment rate and 10,000 new jobs. Third-quarter gross domestic product growth was also slightly higher than the 1.6 percent rate forecast by economists.
The employment gain for November is the 12th straight, the longest since a 14-month span that ended in March 2007.
Household consumption increased by an annualized 4 percent, the GDP report showed, versus estimates for below 3 percent growth. Statistics Canada also revised up second-quarter consumption growth to 5 percent. That’s the best two-quarter gain since before the 2008-2009 recession
The spending is being fueled by a buoyant jobs market that is driving incomes. Compensation of employees rose an annualized 1.3% in nominal terms in the third quarter, the strongest growth since 2014, the GDP report showed.
Highlights From GDP and Jobs Reports
- Employment grew across most industries. Manufacturing employment rose by 30,400 in November, the retail and wholesale category climbed by 38,800 and education services by 20,700
- Full-time employment increased by 29,600, while part-time positions rose by 49,900
- Average hourly earnings rose 2.8% in November from a year ago, the fastest since April 2016, while hours worked slowed to 1%
- Exports plunged an annualized 10.2%, subtracting 3.4 percentage points from the growth rate
- Government investment jumped at an annualized 13%, adding 0.5 points to the growth rate
- Businesses continue to ramp up inventories, rather than pare down sharp increases earlier this year. Inventories added more than 1 percentage point to growth in the quarter
- Non-residential business investment grew for a third-straight quarter, up an annualized 3.7%. Residential investment was down 1.4%
- Overall, gross fixed capital formation -- including government investment -- was up an annualized 3.5%
— With assistance by Erik Hertzberg
GDP
StatCan. 2017-12-01. Gross domestic product, income and expenditure, third quarter 2017
- Real GDP by expenditure, Third quarter 2017: 1.7% increase (quarterly change, annualized)
- Source(s): CANSIM table 380-0064: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=3800064&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=
- National saving rate: 3.6%, Third quarter 2017
- Source(s): CANSIM table 380-0071: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=3800071&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=
- Household disposable income, Third quarter 2017: 0.8% increase (quarterly change)
- Source(s): CANSIM table 380-0072: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=3800072&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=
- Terms of trade: 93.7 (2007=100), Third quarter 2017
- Source(s): CANSIM table 380-0065: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=3800072&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=
- Debt service ratio: 13.88, Third quarter 2017
- Source(s): CANSIM table 380-0073: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=3800073&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=
Growth in real gross domestic product (GDP) slowed to 0.4% in the third quarter of 2017, following a 1.0% increase in the second quarter. Increased household final consumption expenditure (+1.0%) was the main contributor, while weaker exports (-2.7%) moderated growth. Final domestic demand grew 0.9%, a rate similar to the previous two quarters.
Exports fell 2.7% while imports were flat in the quarter. Exports of goods decreased 3.4% following three quarters of growth. Lower exports of motor vehicles and parts (-9.0%) were the largest contributor to the decline, and were generally attributable to work stoppages and changes to certain models destined for the American market. Exports of metal and non-metallic mineral products (-4.5%), consumer goods (-3.1%) and energy products (-1.9%) also fell. Exports of services grew 0.7% on the strength of commercial services (+2.5%).
Chart 1: Gross domestic product and final domestic demand
Businesses made additions to inventories totalling $17.2 billion in real terms, marking the third consecutive quarter of accumulation. The economy-wide stock-to-sales ratio increased to 0.76 following four consecutive quarterly declines.
Household final consumption expenditure grew 1.0% as households increased their outlays on both services (+1.3%) and goods (+0.6%). The main contributor was increased expenditure by Canadians abroad (+7.2%), in tandem with an appreciating Canadian dollar.
Business gross fixed capital investment slowed to 0.4% from 0.7% in the previous quarter. Investment in non-residential structures (+0.5%), machinery and equipment (+1.5%) and intellectual property products (+0.7%) all increased, albeit at slower rates than in the strong second quarter. Investment in residential structures (-0.4%) fell for a second consecutive quarter.
The compensation of employees rose 1.3% in nominal terms, the strongest growth since the third quarter of 2014, while the gross operating surplus of corporations fell 0.7%.
Expressed at an annualized rate, real GDP rose 1.7% in the third quarter. In comparison, real GDP in the United States grew 3.3%.
Chart 2: Contributions to percent change in real gross domestic product, third quarter
Exports fall
Exports fell 2.7% in the third quarter, the first decline since the second quarter of 2016. The decrease was led by goods (-3.4%), while exports of services increased 0.7%.
The decline in goods exports was mainly attributable to motor vehicles and parts (-9.0%), particularly passenger cars and light trucks (-11.7%). Metal and non-metallic mineral products (-4.5%), consumer goods (-3.1%) and energy products (-1.9%) also contributed to the decline.
The growth in exports of services was driven by greater exports of commercial services (+2.5%), while exports of other services declined.
Imports were virtually unchanged in the third quarter. Lower imports of goods (-0.4%) were offset by an increase in services (+1.3%).
Imports of goods were lower due to metal and non-metallic mineral products (-6.6%) and aircraft and other transportation equipment and parts (-13.8%). Increases in industrial machinery and parts (+5.0%) and metal ores and non-metallic minerals (+10.7%) tempered the decline.
Growth in imports of services was largely attributable to an increase in travel services (+2.9%).
Export prices fell 3.9% despite the appreciation in the Canadian dollar. Import prices were down 4.1%, and the terms of trade improved slightly.
Chart 3: Export prices
Household spending increases
Household final consumption expenditure grew 1.0% following a 1.2% increase in the previous quarter.
Outlays on goods slowed to 0.6% after increasing 1.9% in the previous quarter. Growth decelerated in the durable (+1.0%), semi-durable (+0.5%) and non-durable (+0.4%) categories, while outlays on services rose 1.3%.
Expenditure by Canadians abroad (+7.2%) was the main contributor to the growth in household spending in the third quarter. Housing, water, electricity, gas and other fuels (+0.9%) and transport (+1.0%) also contributed.
Housing investment weakens
Investment in residential structures fell 0.4%, following a 0.9% decline in the second quarter. This was the first time since the first quarter of 2013 that housing investment fell for two consecutive quarters.
Ownership transfer costs, which reflect activity in the resale housing market, fell 4.7% following a 5.1% decline in the second quarter. Renovations edged down 0.2%, while investment in new construction rose 1.7%.
Business non-residential investment slows
Business gross fixed capital formation slowed to 0.4% growth in the third quarter, after increasing 0.7% in the previous quarter, with reduced investment in residential structures partly offsetting gains in all other areas. Business investment in machinery and equipment, non-residential structures, and intellectual property products all grew at a slower pace than in the previous quarter.
Increased investment in machinery and equipment (+1.5%) largely contributed to overall growth, as outlays on industrial machinery and equipment grew 5.5%.
Investment in non-residential structures (+0.5%) rose on increased investment in non-residential buildings (+3.1%). Engineering structures declined 0.4% after advancing 2.6% in the previous quarter.
Intellectual property products increased 0.7%, with software (+1.7%) and research and development (+0.5%) contributing to the growth. Business investment in mineral exploration and evaluation fell 3.2% following strong growth in the previous two quarters.
Inventories build up
Businesses added $17.2 billion to inventories in the third quarter, the largest accumulation since the first quarter of 2014. The quarterly stock-to-sales ratio increased to 0.76 following four consecutive quarterly declines.
Wholesalers' inventories rose $6.4 billion, mainly in durable goods. Retailers added $5.4 billion to stocks, with more than half of the build-up ($2.9 billion) in motor vehicles, in tandem with the sharp decline in exports of passenger cars and light trucks. Manufacturers' inventories rose $4.3 billion on larger inventories of non-durable goods.
Farm inventories were reduced by $412 million, the fourth consecutive quarterly draw-down.
Labour compensation increases
The compensation of employees increased 1.3% in nominal terms in the third quarter, a quicker pace than in the previous 11 quarters. Wages and salaries rose 1.9% in goods-producing industries and 1.1% in services-producing industries. Regionally, Ontario and Quebec continued to fuel wage growth in the third quarter. In addition, employees of the federal core public administration continued to receive retroactive salary payments in the third quarter related to new collective agreements.
Nominal growth in household final consumption expenditure (+1.0%) outpaced that of household disposable income (+0.8%), which was tempered by lower dividends received (-4.6%) and higher interest paid on consumer credit (+5.9%). The household saving rate consequently fell from 2.8% in the second quarter to 2.6% in the third quarter.
Obligated principal and interest payments on consumer debt rose at a faster rate (+1.3%) than disposable income in the third quarter, and the household debt service ratio increased for the third consecutive quarter to 13.88.
Corporate earnings weaken
The gross operating surplus of corporations fell 0.7% in the third quarter, compared to a flat second quarter, as weakening international sales resulted in inventory accumulation. The gross operating surplus of non-financial corporations declined 0.8%. Similarly, financial corporations' gross operating surplus was down 0.3%.
FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/171201/dq171201b-eng.pdf
THE GLOBE AND MAIL. DECEMBER 1, 2017. Economy takes a breather; rate hike seen ‘sooner rather than later’
DAVID PARKINSON, ECONOMICS REPORTER
The Canadian economy moderated in the third quarter of the year, taking a breather from its blistering pace of earlier in the year, as exports and home construction slowed while consumer spending continued to drive growth.
Statistics Canada reported that Canada's real gross domestic product grew at an annualized pace of 1.7 per cent in the quarter, on a seasonally adjusted basis, less than half of the growth rate that the economy posted in each of the first two quarters of the year. Economists had expected the pace to slow to more sustainable levels in the latest quarter, following a second-quarter growth spurt of 4.3 per cent. (The second-quarter figure was revised down slightly from an originally reported 4.5 per cent.)
The third-quarter growth rate was the slowest since the 2016 second quarter. Nevertheless, it marked the fifth consecutive quarter of growth for the Canadian economy, the longest streak since 2014.
"Canadian growth was always poised to cool after a monster first half," said Canadian Imperial Bank of Commerce economist Nick Exarhos in a research note.
However, real GDP in September, the final month of the quarter, grew 0.2 per cent month over month, slightly better than economists had expected. The increase, reversing August's 0.1-per-cent decline, marked the strongest performance since June, and indicated that the economy was regaining momentum entering the final quarter of the year.
The third-quarter slowdown was primarily due to a steep 10.2-per-cent annualized decline in exports, which reversed course after having been a key driver of growth in the second quarter. Exports look to have been weighed down by a less favourable exchange rate for the Canadian dollar, which rose more than 10 per cent against the U.S. dollar between early June and mid-September, spurred by rising interest rates from the Bank of Canada.
Meanwhile, investment in residential structures fell 1.4 per cent annualized, evidence of a cooling in key housing markets following regulatory changes designed to raise the bar on mortgage approvals and slow foreign investment.
On the other hand, household consumption remained a strong driver of the economy, up a better-than-expected 4 per cent annualized. And investment in non-residential structures, machinery and equipment rose at a 3.7-per-cent annualized pace, evidence of continued strong business investment – considered a key element in sustaining Canada's current economic expansion.
"Aside from the drop in exports, the news was mostly good," said David Madani, senior Canadian economist at Capital Economics, in a note to clients.
"All told, we wound up with a much more 'normal' pace of growth, consistent with an economy entering the mature phase of the economic cycle," said Brian DePratto, senior economist at Toronto-Dominion Bank, in a research report.
The third-quarter growth was just slightly below the 1.8 per cent that the Bank of Canada had estimated in its most recent quarterly Monetary Policy Report, released in late October. In the same report, the central bank projected that growth in the fourth quarter would pick up to a 2.5-per-cent pace. Economists said the solid September growth rebound puts the economy on a good track to come close to the central bank's target.
"The data is still pointing to a slowing in underlying GDP growth from the outsized pace from mid-2016 to mid-2017, but is also still fully consistent with our – and the Bank of Canada's – view that growth will be sustained at a modestly above-trend 2 per cent pace going forward," said Royal Bank of Canada senior economist Nathan Janzen in a research report.
The slowdown in the third quarter has fuelled considerable speculation about how long the Bank of Canada might delay its next rate increase, after raising rates twice during the second quarter. But the 1.7-per-cent growth pace is still above the central bank's estimate of "potential output growth" – the rate at which it believes the economy can grow without triggering rising inflation, a critical concern for a central bank that relies on inflation targeting to guide its rate decisions. Expectations of a modest acceleration in growth in the fourth quarter indicates that the economy continues to perform above potential, which will add inflationary pressure and keep the central bank on track to raise interest rates further next year.
Economists said the Bank of Canada will likely take particular note of wage data in the GDP report, as rising wages are typically a key catalyst for inflation. Employment compensation grew at a brisk 5.2-per-cent annualized pace in the quarter, its strongest growth in three years.
The strong wage indicators came at the same time that Statscan also reported, in a separate release, that employment surged by 80,000 jobs in November, and unemployment fell to a nine-year low of 5.9 per cent – further indication that a strong labour market could accelerate inflation in the coming months.
Economists said that while the Bank of Canada remains unlikely to raise rates at next Wednesday's rate announcement, the GDP and jobs report, taken together, put a January rate hike squarely on the table.
"Today's reports all support another rate hike coming sooner rather than later," Mr. DePratto said.
REUTERS. DECEMBER 1, 2017. Canada's economy cools in third quarter, November job surge keeps rate hikes in sight
Leah Schnurr
OTTAWA (Reuters) - The Canadian economy slowed in the third quarter after a hot first half of the year as exports tumbled, but an acceleration in hiring and wage growth last month was seen giving the central bank reason to raise interest rates again before long.
The economy added 79,500 jobs in November, Statistics Canada said on Friday, blowing past expectations and sending the unemployment rate to 5.9 percent, its lowest since February 2008 even as labor market participation was unchanged.
“This was another barn-burner of a jobs report,” said Sal Guatieri, senior economist at BMO Capital Markets.
“For the Bank of Canada, this certainly means the economy is doing quite well and pumping out a lot of jobs,” which could make the central bank’s statement after its meeting next week more upbeat, Guatieri said.
The data drove the Canadian dollar to its biggest gain in nearly three months against the greenback. The stock market was steady.
While the central bank is largely expected to hold rates steady on Dec. 6 after raising twice this year, odds of a hike as soon as January rose to 61.5 percent. [CAD/].
It also bolstered minority bets of a third increase next week to 27.6 percent from 20.2 percent ahead of the release.
“It certainly firms the idea that there are more near-term hikes than previously anticipated,” said Michael Dolega, senior economist at Toronto-Dominion Bank.
Average hourly wages continued to accelerate, up an annual 2.7 percent in the best performance since April 2016. The Bank of Canada has pointed to wages as one factor it is looking at to decide future policy.
The Canadian labor market has been on a tear for over a year and has added 390,000 jobs since last November, driven by full-time employment. Last month’s gains were fueled by hiring in the manufacturing and trade sectors.
The jobs figures garnered more attention than the separate gross domestic product report, which showed the economy grew at an annualized 1.7 percent in the third quarter.
The economy had been expected to slow after growth in the first half of the year made Canada a Group of Seven leader.
Exports were the main drag as shipments of vehicles and parts fell. The housing sector also weighed on growth, partly reflecting slower resale activity.
September growth was better-than-forecast, rising 0.2 percent and pointing to momentum heading into the fourth quarter, which is expected to be stronger.
Separate data from Markit showed the pace of growth in the manufacturing sector was little changed in November as firmer new orders and employment were offset by slower production.
Additional reporting by Alastair Sharp and Nichola Saminather in Toronto; Editing by Susan Thomas
StatCan. 2017-12-01. Gross domestic product by industry, September 2017
- Real GDP by industry, September 2017: 0.2% increase (monthly change)
- Source(s): CANSIM table 379-0031: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=3790031&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=
Real gross domestic product (GDP) rose 0.2% in September after edging down 0.1% in August. Goods-producing (+0.4%) and services-producing (+0.1%) industries rose as 12 of 20 industrial sectors grew, led by the mining, quarrying and oil and gas extraction sector.
Chart 1: Real gross domestic product rises in September
The mining, quarrying and oil and gas extraction sector expands
The mining, quarrying and oil and gas extraction sector was up 0.7% in September after declining for three consecutive months.
Chart 2: Mining, quarrying and oil and gas extraction expands in September
The oil and gas extraction subsector rose 1.0% after declining in each of the three previous months. Conventional oil and gas extraction was up 3.4%, led by increased natural gas extraction. Crude petroleum production was also up after declining in August, which was partly due to scheduled maintenance shutdowns in Newfoundland and Labrador. Non-conventional oil extraction declined 1.6%, the third decrease in four months.
For the sixth month in a row, the mining and quarrying (except oil and gas) subsector expanded, rising 0.4% in September. Metal ore mining (+1.6%) grew for the third consecutive month, led by increases in iron ore (+10.2%) and gold and silver mining (+4.7%). Partly offsetting the growth were declines in copper, nickel, lead and zinc mining (-2.4%) and other metal ore mining (-4.0%).
The 1.2% decline in non-metallic mineral mining in September did not offset August's growth. Other non-metallic mineral mining was down 1.6% due to lower activity in the mining of potash and other non-metallic minerals.
Real estate and rental and leasing up
Real estate and rental and leasing rose 0.4% in September. Activity at the offices of real estate agents and brokers increased for the second month in a row, up 3.5% in September, led by increased home resale activity in Ontario and British Columbia. The level of activity of this subsector has not returned to the level registered in March, following changes in provincial housing regulations in Ontario in April.
This increase influenced the 0.6% rise in professional services, as it contributed to a 2.4% increase in legal services.
Utilities up from volatile September weather
Utilities increased 1.7% in September as volatile and unseasonal weather conditions increased the demand for air conditioning and heating across many parts of the country. Electric power generation, transmission and distribution grew 1.5%, while natural gas distribution increased 4.4% with higher demand from all sectors.
Construction grows
The construction sector rose for the fourth consecutive month, up 0.4% in September. Except for a decline in May due in part to a strike affecting unionized construction workers in Quebec, this sector has been up every month since November 2016.
Residential construction was up 1.0% in September as single, double and row dwelling unit construction grew, along with home alterations and improvements. Repair construction increased 1.5%, the largest increase since November 2016, in part as a reflection of favourable weather conditions. Engineering and other construction activities declined 0.6% while non-residential construction contracted 0.3% as a result of lower industrial and public construction.
Transportation and warehousing grows
Transportation and warehousing grew 0.5% as six of nine subsectors increased. Rail transportation was up 4.4% as movement of coal, grain and fertilizer, intermodal and other freight by rail increased. Pipeline transportation expanded 1.3%, as crude oil and other pipeline transportation rose 2.6% while pipeline transportation of natural gas edged down 0.1%. After three consecutive increases, air transportation was down 0.4% in September.
Wholesale and retail trade decline
Following eight increases in nine months, wholesale trade declined 0.9% in September with decreases in seven of nine subsectors. The 6.7% decline in personal and household goods wholesaling more than offset the increases of the previous two months. A 1.3% drop in miscellaneous wholesaling was widespread across the various industries. Food, beverage and tobacco wholesaling (-0.8%) declined for the third time in four months. Activity at building materials and supplies wholesalers was up 2.9%, essentially offsetting the decline in August.
Retail trade was down for the third month in a row, falling 0.5% in September as 9 of 12 subsectors were down. Declines were most notable at clothing and clothing accessories stores (-1.8%), gasoline stations (-2.4%) and motor vehicle and parts dealers (-0.9%). Conversely, sales were up at building material and garden equipment and supplies dealers (+2.1%) and furniture and home furnishings (+2.0%). The unseasonal weather patterns affecting utilities reduced seasonal demand for clothing while favouring higher activity related to construction and home renovation.
Manufacturing is unchanged
Manufacturing was essentially unchanged, as growth in non-durable (+0.4%) was offset by a decline in durable (-0.4%) manufacturing.
In non-durable industries, the growth came mainly from a 4.0% rise in petroleum and coal products after two months of declines. In durable industries, the decline came mainly from a 2.4% decrease in primary metals which was widespread across its industries.
Other industries
The public sector was up 0.3%, with all three components (education, health care and public administration) showing increases.
Accommodation and food services rose 0.9%, with both accommodation services and food services and drinking places showing increases.
Finance and insurance edged down 0.1% in September. Depository credit intermediation and monetary authorities, as well as insurance carriers and brokers, were down while financial investment services, funds and other financial vehicles were essentially unchanged.
Agriculture, forestry, fishing and hunting (-0.5%) was down for the 9th time in 12 months.
Chart 3: Main industrial sectors' contribution to the percent change in gross domestic product in September
Third quarter of 2017
The value added of goods-producing industries increased 0.4% in the third quarter, up for the fifth consecutive quarter, while that of services-producing industries rose 0.6% as 10 of its 15 industrial sectors increased.
The main contributor to the growth in the goods-producing industries was the construction sector (+1.3%), which grew for the fourth consecutive quarter. All subsectors registered growth, with the 2.8% rise in non-residential construction coming after seven consecutive quarterly declines.
Utilities were up 2.9% on the strength of a 3.8% rise in electric power generation, transmission and distribution. Mining, quarrying, and oil and gas extraction was down 0.2% as oil and gas extraction was essentially unchanged, while mining except oil and gas extraction increased but was more than offset by declines in support activities for mining and oil and gas extraction. Manufacturing was down 0.1%, mainly due to declines in transportation equipment manufacturing. Agriculture, forestry, fishing and hunting decreased 0.9%.
Growth in the services-producing industries was led by the fourth consecutive quarterly increase in wholesale trade (+2.0%) as all subsectors grew.
The public sector (education, health care and public administration) rose 0.9% with all components contributing to the growth. It was the 13th consecutive quarterly growth of the sector since the third quarter of 2014.
There were notable increases in professional, scientific and technical services (+0.9%) and transportation and warehousing (+0.6%). Real estate and rental and leasing rose 0.3%, but activity at real estate agents and brokers was down 5.6%, the fourth decline in the last five quarters. Retail trade (-0.1%) edged down following four consecutive quarters of growth, while finance and insurance was essentially unchanged after having grown for eight quarters in a row.
FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/171201/dq171201c-eng.pdf
REUTERS. DECEMBER 1, 2017. Canada manufacturing growth pace little changed in November
OTTAWA, (Reuters) - The pace of growth in the Canadian manufacturing sector was little changed in November as an uptick in new orders and employment was offset by slower production, data showed on Friday.
The Markit Canada Manufacturing Purchasing Managers’ index (PMI), a measure of manufacturing business conditions, edged up to a seasonally adjusted 54.4 last month from 54.3 in October. A reading above 50 shows growth in the sector.
While the forward-looking measure of new orders rose to 53.9 from 53.2, it was still softer than the strong performance seen in the first half of the year as the broader economy accelerated.
Manufacturers said domestic demand and a rebound in the energy sector helped drive new orders in November. However, weaker spending from U.S. clients led to a further drop in export orders, with the index contracting to 49.4 from 49.8.
Companies said the decline in exports also contributed to slower output, which cooled to 53.7 from 54.2.
Employment rose to a three-month high at 55.8 from 55.4 as companies were forced to hire to deal with an increase in the backlog of work.
Higher materials costs saw input prices jump to the highest level since April 2014 at 65.3 from 62.6, but firms passed some of that on to their clients with factory gate prices rising to 55.6 from 54.6.
Reporting by Leah Schnurr; Editing by Chizu Nomiyama
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