CANADA ECONOMICS

WTO

Global Affairs Canada. 2017-12-13. Canada plays leadership role on Trade and Women’s Economic Empowerment at WTO

Canada is championing a more progressive approach in all of our trade agreements, including at the World Trade Organization (WTO).

Gender equality and the empowerment of women and girls is a top priority of the Government of Canada and we believe there is growing recognition that the benefits of trade have not been equally shared.

In order to effectively diversify into new markets, everyone must be included and everyone must be given a fair chance to succeed.  The gap in women’s participation in trade and the economy is an untapped resource that cannot be denied. Dismissing entire parts of the population is not an option.

The Canadian people are, after all, what gives the Canadian economy its might.

Today, the Honourable François-Philippe Champagne, Minister of International Trade, was pleased to announce that a majority of members endorsed the Joint Declaration on Trade and Women’s Economic Empowerment. Canada has been a key leader in the drafting and the promotion of this initiative. The Declaration adapts Canada’s free trade agreement gender chapter to a multilateral context by establishing commitments for action and collaboration within the WTO.

Canada’s position is that trade should be a march to the top not a race to the bottom. This joint declaration demonstrates a will to improve the terms of trade and ensure the rules-based system on which we depend, works for everyone.

Quotes

“I am very proud of the leadership role Canada is playing in advancing this Joint Declaration on Trade and Women’s Economic Empowerment. In today’s competitive global economy, leveraging the best and brightest entrepreneurs – both women and men – is a win-win situation for all.  It is not only the right thing to do, it just makes economic sense.”

- François-Philippe Champagne, Minister of International Trade

Quick Facts

• A 2015 study by McKinsey Global Institute found that advancing women’s equality could add $12 trillion to the global gross domestic product by 2025.
• A 2017 study, also by the McKinsey Global Institute, found that by closing its gender gap Canada could add $150 billion to annual GDP growth by 2026.
• Eliminating barriers that discriminate against women working in some sectors could increase labour productivity by as much as 25%.

Joint Declaration on Trade and Women’s Economic Empowerment: http://www.intracen.org/uploadedFiles/abmfiles/BuenosAiresDeclarationonWomenand%20Trade.pdf
Canada and the World Trade Organization: http://international.gc.ca/world-monde/international_relations-relations_internationales/wto-omc/index.aspx?_ga=2.27031741.1636856730.1513187316-1371245540.1491838080&lang=eng
World Trade Organization: https://www.wto.org/

Global Affairs Canada. December 12, 2017. Canada supports agricultural trade at WTO. Statements

Ottawa, Ontario

Ensuring a predictable and progressive global trade environment helps Canada’s agricultural exporters remain competitive in today’s economy and creates opportunities for middle-class Canadians. To advance this priority, Canada is working with World Trade Organization (WTO) members in support of balanced global trade governance at the 11th WTO Ministerial Conference in Buenos Aires, Argentina.

Today, the Honourable François-Philippe Champagne, Minister of International Trade, and the Honourable Lawrence MacAulay, Minister of Agriculture and Agri-Food, are pleased to announce that Canada signed the Joint Ministerial Statement on Trade in Food and Agricultural Products. The statement re-affirms the central importance of science and risk analysis to protect public health while enabling the safe use of pesticides.

Canada continues to support efforts to ensure that the global trade community makes decisions based on science. Doing so improves market predictability for Canada’s farmers and processors, and provides stability for Canadian consumers.

Quotes

“Canada advocates for science-based and evidence-based decision-making. Canada believes it is crucial to work collaboratively to reduce and eliminate unjustified non-tariff measures, particularly in the agricultural sector, and reaffirm our commitment towards science-based and evidence-based decision making at the WTO. 

- François-Philippe Champagne, Minister of International Trade

“The Government of Canada supports an effective, transparent and science-based trade environment for Canadian farmers and processors. Canada’s agricultural exports are a key driver of the Canadian economy, and our Government is working hard to ensure predictability for trade, which will help increase innovation and productivity, while strengthening the middle-class.‎”

- Lawrence MacAulay, Minister of Agriculture and Agri-Food

Quick facts

• Canada's agriculture and agri-food industry is a powerful driver of Canada economy, providing 1 in 8 jobs to Canadians.
• In 2016, Canada’s agriculture and food exports set a new record of over $60 billion.

Agro-food trade issues: http://www.agr.gc.ca/eng/industry-markets-and-trade/agri-food-trade-issues/technical-trade-issues-in-agriculture/?id=1384285632268

REUTERS. DECEMBER 13, 2017. WTO to end meeting with no deals after U.S. rebukes
Luc Cohen

BUENOS AIRES (Reuters) - Trade ministers looked set to wrap up their biennial World Trade Organization (WTO) meeting on Wednesday without any new agreements after criticism of the agency by the United States, once the WTO’s driving force.

Ministers gathered in Buenos Aires were never expected to agree on major trade reforms, but even relatively minor proposals on e-commerce and fishing subsidy curbs ran aground.

“Members cannot even agree to stop subsidizing illegal fishing. Horrendous,” European Union Trade Commissioner Cecilia Malmstrom wrote on Twitter on Wednesday.

“Destructive behavior by several large countries made results impossible,” Malmstrom added without naming them.

Instead, ministers were focusing on the WTO’s post-conference work programs, such as efforts to improve market efficiency and curb excess industrial capacity, WTO spokesman Ken Rockwell told reporters.

“While there is disappointment that we couldn’t get a little further in terms of concrete outcomes, being able to nail down an effective work program is very important,” Rockwell told reporters.

U.S. Trade Representative Robert Lighthizer set an acrimonious tone at the start of the conference with sharp criticisms of the WTO. The 23-year-old trade body requires unanimity among all 164 WTO member countries to reach any agreement.

Lighthizer told WTO ministers on Monday that it was impossible to negotiate new rules while many of the current rules were not being followed, and that the WTO was losing its focus and becoming too litigation-focused.

Even the perfunctory joint ministerial statement looked in doubt at the conference, known as MC11.

AMERICA FIRST

Driven by President Donald Trump’s “America First” strategy and a preference for bilateral deals, the United States had already blocked ambassadors from drafting a ministerial text in Geneva that included references to the centrality of the global trading system and to trade as a driver of development.

USTR spokeswoman Emily Davis denied that the United States was the problem in the lack of negotiated outcomes, saying the Obama administration had raised similar WTO grievances.

“The United States has remained engaged throughout MC11 to achieve progress where possible,” Davis said in an emailed statement. “Under these circumstances, it’s nonsense for anyone to think that MC11 could be adrift over Ambassador Lighthizer’s honest remarks on issues the United States has been raising for years.”

Lighthizer left Buenos Aires for Washington on Tuesday night, missing the final day of the conference.

The failure to reach any major deals meant that negotiations on the same topics will continue into 2018, with no deadline and no heavyweight ministerial momentum to get agreement.

Many trade experts disagree with the U.S. view toward the WTO and are dismayed that the United States is vetoing new judicial appointments at the WTO, which is threatening to halt the settlement of trade disputes.

Ministers who followed Lighthizer onto the podium offered widespread support for the global trading system, with the WTO at its heart.

But on Tuesday, the European Union and Japan joined the United States in vowing to combat market-distorting policies, such as those pervasive in China that have fueled excess industrial capacity, including subsidies for state-owned enterprises and technology transfer requirements.

An EU source familiar with negotiations over the statement said it was instigated by Japan, partly as a means to coax Washington into working multilaterally to solve such problems rather than resorting to unilateral trade restrictions.

Additional reporting by David Lawder; Writing by Tom Miles and David Lawder; Editing by Raissa Kasolowsky and Andrew Hay

BOMBARDIER

THE GLOBE AND MAIL. THE CANADIAN PRESS. DECEMBER 13, 2017. Bombardier unions expect protracted trade dispute with Boeing over C Series
JULIEN ARSENAULT, MONTREAL

The largest unions in Canada and Britain anticipate Bombardier and Boeing are in for a protracted trade battle as they prepare for the U.S. Commerce Department to confirm massive duties on imports of the C Series aircraft.

Following a meeting with Bombardier management Wednesday, Unifor and Unite the Union said the chances are slim that the U.S. will lower or cancel the 300 per cent import duties applied in a preliminary ruling.

Washington is expected to vote Monday on the preliminary and anti-dumping countervailing duties announced in the fall.

"There's no question this is going to end up in front of the WTO (World Trade Organization)," Unifor National President Jerry Dias told reporters.

"You can't depend on the kangaroo courts in the U.S. to rule in favour of (Bombardier)."

A battle before the international trade tribunal would likely take months or years to resolve. Canada can also challenge the ruling under NAFTA.

Unifor and Unite also expressed serious doubts that the U.S. International Trade Commission will conclude in February that Boeing wasn't harmed by the C Series.

Boeing alleges the Quebec aircraft manufacturer sold C Series aircraft to Delta Airlines at an unfairly low price thanks to financial support from the federal, provincial and British governments.

Dias, Unifor's Quebec director Renaud Gagne and Steve Turner, assistant secretary general of Unite, representing workers in Northern Ireland, met for about an hour with Bombardier CEO Alain Bellemare.

The unions from both sides of the Atlantic are meeting to come up with a common strategy to protect jobs as the U.S. is to decide whether the punitive duties will come into effect.

Dias and Turner are also expected to be in Washington in the next few days to meet with U.S. government and elected officials about Bombardier.

Unifor represents nearly 10,000 aerospace workers in Canada, including several thousand from C Series subcontractors.

"We have no confidence that the current U.S. administration will look at this in a rational way," Turner said when asked about his expectations for the decision Monday.

"We are not dealing with a rational president and we're not dealing with an administration that is really looking at the long-term interests of the United States."

Unite, which has 1.42 million members in the United Kingdom, represents about 3,000 of the roughly 4,200 Bombardier workers in Northern Ireland where the C Series wings are made.

The union representatives noted that more than half of C Series components are made in the United States, generating some 22,000 jobs south of the border.

The union leaders said they were reassured in the meeting that the arrival of Airbus as the majority shareholder of the C Series program would stabilize the short– and medium-term future of Bombardier's largest aircraft.

Although Unifor isn't pleased with a proposed second C Series assembly line at Airbus' facility in Alabama, Dias said it was the price to pay for the C Series to take off.

Airbus and Bombardier believe that this initiative will allow planes to be delivered to American customers without punitive duties.

"Of course, our concerns were going to be the impact that the Alabama assembly line was going to have on Quebec," Dias added.

"But based on the amount of opportunities, the fact that the largest market (for the plane) is outside of the U.S. if you take a look at the Asian market, Bombardier is quite confident that it's not going to have a negative impact on the Quebec facility."

REUTERS. DECEMBER 13, 2017. Airbus leadership under fire as crisis deepens
Tim Hepher, Cyril Altmeyer

TOULOUSE/PARIS (Reuters) - Airbus is engulfed in a fresh bout of speculation over the future of senior managers as corruption probes rattle the aerospace company and add fuel to a long-running clash of egos at the top, people familiar with the group said.

Board directors meeting on Thursday are seeking to contain damage from multiple international fraud investigations over commercial and military sales, while getting a grip on what could become a chain reaction of departures, insiders said.

“You can’t rule out a change of governance before the end of the year,” a senior source close to the company said.

Others are more cautious, pointing to 2018 as the pivotal period for a company enjoying a record share price but struggling to maintain its sales position against rival Boeing.

So far, investors have been sanguine about the impact of investigations and a loss of sales momentum, but coupled with senior retirements, the sense of uncertainty is deepening.

“You won’t recognize the company within 12-18 months,” a person who deals closely with Airbus said.

Chief Executive Tom Enders has indicated he will not stay beyond his current term which ends in 2019, Le Figaro reported on Tuesday, reversing a position taken in April.

Enders, who is seen as increasingly isolated after losing a top aide last week and facing a backlash over compliance reforms, has said his future is up to him and the board.

“Reports of my demise are premature and exaggerated,” he told Reuters on the sidelines of an aircraft delivery ceremony in Toulouse on Wednesday.

In a move first reported by Reuters in October, the board has appointed head-hunters to examine fresh options for top posts, though the company insists this is a normal planning exercise.

‘WHO GOES AND IN WHAT ORDER?’

Industry sources have said Enders is expected to give up on a third term for a mixture of personal reasons and a recognition the board is looking for a fresh start to ease the chances of a settlement of corruption allegations.

The more pressing question, some company watchers say, is whether Enders will complete his current mandate and stay through 2018.

Enders, who turns 59 this month, has said he is focused solely on his mandate to 2019. He recently won the board’s backing amid a flurry of negative press reports.

That in turn has raised speculation whether his deputy and long-time internal rival Fabrice Bregier will ride out the storm and fulfill a long-held ambition to succeed Enders.

Only a handful of people expect Bregier, who is in charge of delivering on a record order backlog that underpins the share price, to stay for long if it becomes clear he is no longer Enders’ automatic heir.

He has been occasionally linked with energy firm Engie. But so far he has appeared strongly committed to Airbus and one person who has known both executives for years said Bregier was still expected to succeed Enders.

La Tribune newspaper reported Bregier had agreed to leave in February next year, but in a statement issued from Asia where he is visiting customers, Bregier dismissed such speculation.

“I am surprised by information reported by the press about my imminent departure,” Bregier said. “I only have one priority: to meet Airbus targets (including) the delivery of more than 700 aircraft this year.”

Festering animosity between Bregier and Enders boiled over earlier this year in a row over who should control the powerful jet sales department - a spat first disclosed by Reuters.

The two are now locked in a battle for survival which could leave both of them vulnerable, insiders said.

Both have told visitors they expect the other to go, but sources disagree whether Enders is maneuvering for Bregier’s early departure as their power battle intensifies.

“The question is who goes and in what order,” a source close to the company said.

A person close to Enders denied speculation of a management crisis, adding “we are taking all the necessary decisions, the company is running well, we are active in the (aircraft) market and we are delivering on our targets.”

Succession plans and operational priorities will be discussed by the board on Thursday, but a source familiar with the agenda said it would not likely be a decisive session.

Editing by Mark Potter

BLOOMBERG. 13 December 2017. Bombardier Bills Marquee Jet as U.S.-Made in Boeing Trade Fight
By John McCormick , Andrew Mayeda , and Frederic Tomesco

• Canadian company marshalls U.S. political support for C Series
• Key hearing in dispute is scheduled for Dec. 18 in Washington

Bombardier Inc., a crown jewel of Canadian manufacturing, is billing itself as a major U.S. employer in a bitter trade fight with Boeing Co. that has profits, diplomatic ties and the future of a fledgling aircraft on the line.

The maker of the narrow-body jet at the heart of the dispute has assembled an influential group of U.S. politicians, vendors and customers to back its side in a case brought by Boeing, which reaches a critical hearing next week in Washington. Bombardier says more than half its all-new C Series aircraft is made in U.S. factories even though final assembly takes place near Montreal.

The U.S. International Trade Commission is slated to hear arguments Dec. 18 on whether American industry was harmed by Bombardier’s sale of its jet to Delta Air Lines Inc. at what Boeing calls an unfairly low price -- enabled in part by subsidies in Canada. The U.S. Commerce Department sided with Boeing in a preliminary ruling in October and ordered tariffs of about 300 percent. Delta has vowed not to pay.

While President Donald Trump likely won’t intervene directly in the case, the dispute is a test of his pledge to enforce U.S. trade laws more strictly while also encouraging foreign investment.

Companies in other industries will be watching closely. A U.S. solar-panel maker is pushing for import tariffs, while steel producers are calling for a crackdown on shipments from China. The U.S. must also decide on washing-machine tariffs after a complaint brought by Whirlpool Corp. against Samsung Electronics Co. and LG Electronics Inc.

‘Bitterly Disappointed’

The Bombardier case has already bruised U.S. relations with Canada and heightened tensions in the talks to overhaul the North American Free Trade Agreement. Canadian Prime Minister Justin Trudeau, who has aggressively defended Bombardier and discussed the matter with Trump, dropped the planned purchase of 18 Boeing fighter jets because of the dispute.

The British government warned Boeing it could lose defense contracts. Prime Minister Theresa May said she was “bitterly disappointed” by the tariffs, which threaten about 1,000 jobs in Northern Ireland.

For Montreal-based Bombardier, a loss would make other U.S. carriers hesitant about buying the C Series and could potentially prompt Delta to drop the order, said Addison Schonland, a partner at consultant AirInsight.

The ITC ruling, expected in late January, is also critical to the company’s medium-term profitability as it prepares to deliver planes to Delta. In April 2016, the No. 2 U.S. airline ordered 75 of Bombardier’s CS100 jets, which carry fewer passengers than Boeing’s smallest aircraft, and secured options for 50 more C Series planes.

The order has a list value of $5.6 billion before customary discounts. Bombardier hasn’t disclosed the price agreed to with Delta, nor has it revealed its unit costs in building the C Series.

U.S. Suppliers

Bombardier will need all the help it can get in challenging the world’s largest aerospace company, which has developed a strong relationship with Trump. Bombardier argues that more than half of the aircraft’s content is sourced from U.S.-based suppliers, including engine maker United Technologies Corp. Bombardier employs about 7,000 in 17 American states, while Chicago-based Boeing has 142,000 workers in all 50 states.

The nationality of the C Series got even more complex after Boeing filed its complaint in April. That’s because its chief rival, Europe’s Airbus SE, announced plans in October to acquire a controlling stake in the program, throw its marketing heft behind the program and eventually open a second assembly line in Alabama.

“It’s a huge victory for President Trump and all that he has been trying to do to bring more foreign investment and jobs to America,” said Representative Bradley Byrne, whose Alabama district stands to gain 400 to 500 Bombardier jobs. “This is not anti-Boeing. It’s pro-American.”

Boeing, a major campaign donor, has plenty of friends of its own in Congress. It also spent $13 million to lobby in Washington during the first three quarters of 2017, compared with $1.1 million by Bombardier, according to data compiled by Bloomberg Government.

‘Enduring Commitment’

Still, Bombardier has won plenty of support from politicians who have company employees in their states or districts. Letters shared with Bloomberg show members of Congress from both parties have written to the ITC, as has the governor of West Virginia and various airlines.

“Bombardier has demonstrated an enduring commitment to the U.S., and its operations have had an unquestioned positive impact on our economy,” Arizona’s senators, John McCain and Jeff Flake, wrote in a Sept. 28 letter. The company has operations in Phoenix and Tucson.

Bombardier Chief Executive Officer Alain Bellemare and other top executives will likely discuss the trade dispute Thursday during a presentation to investors in New York.

Bombardier has argued the C Series isn’t a comparable product to Boeing’s 737 and notes that Boeing didn’t formally take part in the competition that led to Bombardier’s sale to Delta. In a statement, Bombardier said Boeing is demonstrating “hypocrisy on launch pricing” by complaining about a tradition in the industry of giving major discounts to early buyers of a new aircraft.

Boeing disputes the view that the C Series isn’t a direct competitor. The seating capacity of the CS300, the biggest model, is comparable to that of the smallest 737 jets. In its own statement, Boeing said Bombardier has “willfully broken U.S. and international trade law by illegally dumping its government subsidized C Series jets, which pose a direct threat to the Boeing 737-700 and 737 Max 7.”

Besides bad blood between competitors, the case also threatens the very nature of aviation industry’s global supply chain, aerospace observers say.

“If this gets carried to its fullest conclusion and if there is retaliation, then you are damaging the idea that jetliners are an asset that everyone wants to finance, like New York real estate with wings,” said Richard Aboulafia, an analyst at Teal Group. “This is a global industry and the idea of trade barriers is almost quaintly obsolete.”

AVIATION

The Globe and Mail. 13 Dec 2017. AVIATION. EDITORIAL. Our incurable case of jet lag

At this point in Canadian history, it has become a real challenge to put one’s faith in Ottawa’s ability to purchase modern fighter jets. Our air force has an aging fleet of CF-18s purchased in the 1980s, and of which about 80 are still operational. That may or may not be adequate for fulfilling all of our military obligations, depending on whom you ask.
The Conservative government of Stephen Harper wanted to replace the CF-18s with 65 Lockheed Martin F-35 Lightning IIs, but its sole-source procurement process was so botched that the cost ballooned from $9-billion to $45-billion, and Ottawa had to start over again.
The Trudeau government came to power with the promise of a new and better competitive bidding process. It also said it would fill interim operational gaps by purchasing 18 Boeing Super Hornets, a sole-source contract worth $6.4-billion.
Then, in April, Boeing launched a (so far) successful trade dispute against Bombardier. So Ottawa said on Tuesday that it is cancelling the Hornet deal in retaliation and instead will buy used F-18s from Australia for at least $500-million.
The government also said it will formally launch its bidding process in 2019, with the goal of awarding a contract in 2022 and getting planes delivered by 2025. One caveat: The contract will not go to a company “that is responsible for harm to Canada’s economic interest” [cough cough Boeing].
So that’s where we are. If the Conservatives hadn’t made a mess of things, we’d have brand new fighter jets in the air by now. Instead, our aging fleet will be bolstered by Australian leftovers – not necessarily a bad thing, but far from ideal. We’ll finally get new planes in 2025, nine years after the last new ones were supposed to have been uncrated.
That’s the theory, anyway. With a four-year timeline for finalizing a contract, anything can happen. A new government could scrap the plan. Or our over-politicized procurement process could again go off the rails and we could end up buying more planes off the international used-jet sales lot.
History tells us that it is impossible to know how this will turn out, which makes it impossible to evaluate the government’s new plan. The most that can be said is that Ottawa didn’t do anything particularly dumb on Tuesday. It’s a start.

The Globe and Mail. 13 Dec 2017. Ottawa to link ‘economic interests’ in contract bids. Jets: Boeing to review policy before deciding. New test follows Boeing dispute to ensure foreign firms provide overall positive impact
DANIEL LEBLANC, OTTAWA

The federal government is vowing to make it harder for companies that harm Canada’s “economic interests” to win major contracts, starting with the $26-billion competition to provide 88 new fighter jets to the Canadian Armed Forces.
The new requirement will be fleshed out in coming months, with Procurement Minister Carla Qualtrough acknowledging that it will include a mix of “objective and subjective elements.” Officially, the new “economic impact test” will apply to all bidders in major competitions, with Ms. Qualtrough and Innovation Minister Navdeep Bains insisting the requirement complies with Canadian and international law.
Still, the new test was quickly dubbed the “Boeing clause” as it comes in response to U.S.-based Boeing Co.’s unresolved trade dispute with Canada’s Bombardier Inc. Boeing said last April that the Canadian plane maker used unfair government subsidies to clinch an important contract for 75 CS 100 planes to Atlanta-based Delta Air Lines at “absurdly low” sale prices.
Prime Minister Justin Trudeau has said the trade dispute will affect Boeing’s future dealings with the government, which is now giving itself leverage to fight back in disputes with foreign companies.
“Anyone can apply, but we’ve been very clear with this new policy: If there is economic harm to Canada, if there’s an impact on Canadian jobs, if there’s an impact to some of the key sectors in the Canadian economy, you will be at a distinct disadvantage,” Mr. Bains said at a news conference.
The test was announced as Ottawa confirmed it cancelled plans to buy 18 new Super Hornet fighter jets from Boeing. It is buying second-hand Australian fighter jets as an “interim” measure to help Canada’s fleet of CF-18s to meet international obligations.
Defence analyst David Perry said the economic impact test stands to create a new layer of complexity in military procurements that are already beset by delays. “If this is not a superficial, political assessment about whether or not the government of Canada likes this company or not, this will require bureaucratic time and effort to come up with a detailed assessment that will pass legal review.”
Mr. Perry, a senior analyst at the Canadian Global Affairs Institute, added that companies such as Boeing, which do billions of dollars of business and provide thousands of jobs in Canada, will be hard to box in specific categories.
“Just coming down with some neat, clean assessment that says, on balance, this company is providing economic harm to Canada will be really difficult,” Mr. Perry said.
Boeing said that it is awaiting further details on the new economic impact test before deciding how to proceed on the upcoming competition for new jets. “We will review the Future Fighter Capability Project requirements for 88 jets, including the ‘Boeing Clause,’ and make a decision at the appropriate time,” company spokesman Scott Day said.
The federal government announced new details on the competition to replace Canada’s fleet of CF-18s on Tuesday.
A formal request for proposals is scheduled to be unveiled in spring, 2019, with a winning bidder announced in 2022. In addition to Boeing, other potential bidders include Lockheed Martin (F-35), Saab (Gripen), Dassault (Rafale) and Eurofighter (Typhoon).
The opposition focused its attacks on the fact the government will be buying second-hand planes at an unspecified price instead of quickly launching a competition for new fighter jets.
“We know these eighties-era jets are rusted out because a 2012 Australian report said corrosion was so bad that the number of active flying days had to be cut. This is not a bucket of bolts; this is a bucket of rusted-out bolts,” Conservative MP Tony Clement said during Question Period.
The government responded by blaming the Harper government for its failed attempt to buy F-35s without going to tenders.
General Jonathan Vance, the Chief of the Defence Staff, said the requirements for the full fleet of new fighter jets have been redrawn since the days in which only the F-35 could qualify.

THE GLOBE AND MAIL. REUTERS. DECEMBER 13, 2017. Boeing dispute could give Lockheed Martin edge in race to supply Canadian jets
DAVID LJUNGGREN, OTTAWA



The US Lockheed Martin F-35 Lightning II performs his demonstration flight at Paris Air Show, in Le Bourget, east of Paris, France, Tuesday, June 20, 2017 in Paris.
MICHEL EULER/THE ASSOCIATED PRESS

Canada's decision to make it harder for Boeing Co to win a major jet order hands rival plane maker Lockheed Martin Corp an advantage in capturing the contract, defense experts said on Wednesday.

That would mark a reversal in Lockheed's fortunes after Liberal leader Justin Trudeau campaigned in 2015 on a promise not to buy the firm's F-35 stealth fighter.

Trudeau's government on Tuesday scrapped plans to buy 18 Boeing Super Hornets and made clear the company would not win a contract for 88 jets unless it dropped a trade challenge against Canadian planemaker Bombardier Inc.

Government officials estimate the cost of the jets at between $15-billion and $19-billion and say it is the biggest investment in the air force in 30 years.

Last week Boeing issued a statement making clear it would not back down in its fight against Bombardier, which it accuses of trying to dump airliners on the U.S. market.

The firm may not even launch a bid for the 88 jets, the first of which are due to be delivered in 2025.

That leaves the F-35, a new aircraft, up against two European rivals which first flew in the 1990s: the Eurofighter Typhoon and Dassault Aviation SA's Rafale.

"The longer this process plays out, the narrower the government's options become, and the prospects for a European jet become even dimmer," said one defense source, who declined to be identified given the sensitivity of the situation.

A second defense source said Boeing now had little chance of winning the 88-plane contract and noted Canada's air force had long sought an American jet so it could operate easily with the U.S. military.

Neither source works for a company which might make a bid.

Lockheed Martin said in a statement it was confident the F-35 was superior to older competitors.

Boeing spokesman Scott Day described the Super Hornet as "the low-risk, low-cost approach" which could serve Canada's needs well into the future.

Canada is part of the nine-nation consortium that helped fund development of the F-35, which has been hit by years of delays and cost overruns.

Trudeau initially opposed the F-35 on the grounds that it was too costly but Ottawa has since softened its line. Officials insist the competition will be open and say no company will be excluded.

Yet in a clear swipe at Boeing, federal ministers on Tuesday said any bidder deemed to have harmed Canada's economy would be at a distinct disadvantage.

"Can Canada get away with this? The answer is probably ... when procurement for the military is involved, governments have wide latitude," U.S. trade expert Bill Perry said by email.

Boeing accuses Bombardier of imitating Airbus by trying to muscle into the U.S. market. People familiar with Boeing say the strategic importance of defending its core passenger jet business outweighs the fighter dispute.

Jerry Dias, president of the Unifor union, said in a phone interview he did not think Boeing would react by cutting jobs. Unifor represents 1,300 workers at a Boeing plant in Winnipeg.

Boeing says its operations support 17,500 Canadian jobs.

REUTERS. DECEMBER 12, 2017. Canada to Boeing: back down or lose chance of big fighter order
David Ljunggren, Andrea Hopkins

OTTAWA (Reuters) - Canada on Tuesday scrapped plans to buy 18 Boeing Co BA.N jets and made clear the company had little chance of winning a much larger contract unless it dropped a trade challenge against Canadian planemaker Bombardier Inc BBDb.TO.

The announcement marks a new low in relations between the Liberal government and Boeing and casts into doubt the future of defense cooperation with the U.S. aerospace company, which says it supports more than 17,500 jobs in Canada.

Ottawa announced last year it wanted to buy the Boeing jets as a stopgap measure while Canada runs a competition for 88 jets to replace its aging 77 CF-18s fighters.

Instead Ottawa will buy a second-hand fleet of 18 Australian F-18s, the same planes Canada already operates. The value of the deal will be around C$500 million ($388 million).

In a clear reference to Boeing, Carla Qualtrough, public works and procurement minister, told a news conference that “bidders responsible for harming Canada’s economic interests will be at a distinct disadvantage” compared to other companies participating in the competition for the 88 jets.

Reuters reported last week that the Liberals would walk away from the 18 Boeing jets after Boeing opened a trade challenge against Bombardier, accusing Bombardier of dumping airliners on the American market.

Qualtrough said the competition would be open and no companies would be excluded.

Innovation Minister Navdeep Bains did not respond directly when asked at the news conference whether Boeing could improve its chances of winning the order for 88 jets by bowing to a Canadian government demand to drop the trade challenge.

Bains and other ministers said they wanted to deal with “a trusted partner”. In recent months, Canadian officials have said they do not consider Boeing a trusted partner.

In a statement, Boeing said it would decide at the appropriate time whether to take part in the competition. Rival Lockheed Martin Corp LMT.N issued a statement describing itself as “a trusted partner”.

If Boeing is excluded, other potential winners include Dassault Aviation SA AVMD.PA and Airbus SE AIR.PA.

The issue has become a political problem for Prime Minister Justin Trudeau. Andrew Scheer, leader of the official opposition Conservative Party, on Tuesday mocked him for buying old jets.

“If the Prime Minister is so keen on buying fixer-uppers, will he come over, because I have an old minivan I would love to show him,” Scheer said to laughter in the House of Commons.

The cost of the 88 jets is estimated at C$15 billion to C$19 billion.

The air force has long preferred a U.S. jet, according to Canadian defense sources. Canada is part of the consortium that helped develop Lockheed Martin’s F-35 stealth fighter and the previous Conservative government announced in 2010 it would buy 65 of the planes.

It later backtracked and during the 2015 election campaign Trudeau vowed not to buy the fighter on the grounds it was too expensive. After he took power, the government subsequently softened its tone.

($1 = 1.2873 Canadian dollars)

Reporting by David Ljunggren and Andrea Hopkins; Editing by Susan Thomas, Jeffrey Benkoe and Grant McCool

BLOOMBERG. 12 December 2017. Trudeau Snubs Boeing, Unveils Plan to Buy Used Australian Jets
By Josh Wingrove  and Greg Quinn

• Canada officially scraps purchase of 18 new Super Hornets
• Country will launch bidding for full fleet replacement in 2019

F/A-18F Super Hornet fighter jets, manufactured by Boeing Co. Photographer: Carla Gottgens/Bloomberg

The Trudeau government is escalating a trade fight with Boeing Co., ditching plans to buy 18 Super Hornets while launching a search for new fighter jets under parameters that could hamper future bids from the U.S. plane maker.

Canada said Tuesday it would instead pursue plans to buy 18 used Australian F-18 fighter jets to supplement its aging fleet, and launched the process to buy 88 new jets as a long-term replacement. Officials didn’t specify a purchase price or maintenance cost for the Australian jets. The purchase needs approval from the U.S. government.

It’s the latest development in a dispute between the U.S. and Canada as Boeing pursues a trade challenge against Montreal-based Bombardier Inc. -- and comes with a potential new wrinkle for the U.S. company. Canada created a new procurement step, saying companies that hurt the country’s economy would be hard pressed to win any contracts, including the lucrative 88-jet order.

“Bidders responsible for harming Canada’s economic interests will be at a distinct disadvantage,” Procurement Minister Carla Qualtrough said at a press conference. “The assessment criteria will be used in future procurements.”

‘Hard Place’

Chicago-based Boeing launched a challenge against Bombardier over commercial planes. President Donald Trump has so far rejected calls to intervene from Prime Minister Justin Trudeau, who ruled out buying new F-18 Super Hornets in September unless Boeing dropped its challenge. Theresa May has also lobbied Trump on the issue, defending Bombardier jobs in Belfast.

The prime minister campaigned in 2015 on not buying Lockheed Martin Corp.’s F-35 fighters due to the cost. Canada will now instead move to buy used jets, something its defense minister ruled out just 10 months ago. The Australian planes are of similar design and vintage to Canada’s aging CF-18s, and Canada expects the first supplemental planes to be ready for service in the early 2020s.

“Looks like Canada is between a rock and a hard place,” said George Ferguson, senior aerospace defense analyst for Bloomberg Intelligence. “They canned the joint strike fighter because it was too expensive,” he said, referring to the F-35. “Now they are going for used rather than new F-18s. Seems like they will need to keep buying used until the memory of this fades.”

Industry Day

Canada said it would engage with stakeholders through 2018 and 2019 as it considers its permanent replacement fleet, holding a fighter plane industry day next month to provide manufacturers with information. It expects to award a contract in 2022 and forecasts delivery of its first permanent replacement plane in 2025.

Boeing “respects the Canadian government’s decision,” Scott Day, a spokesman, said by email, adding the company will “continue to support all efforts to build an environment of free and fair competition marked by compliance with agreed upon rules.”

Ferguson doesn’t expect the U.S. planemaker to drop its Bombardier challenge to appease Canada. "Boeing is not going to back down," he said.

Bombardier Spokesman Simon Letendre said in an email the government’s decision “should come as no surprise given Boeing’s unprincipled opportunistic attack on the Canadian aerospace industry.”

New Jets

The cost of the planned air force equipment purchases including the fighter jet replacement has been estimated at C$26.4 billion ($20.5 billion) over 20 years.

The jet purchase comes in a politically charged environment. Canada and the U.S. are sparring over aerospace and softwood lumber, while also renegotiating the North American Free Trade Agreement. That list now includes approval of the Australian sale.

Transfers to a third party of military equipment originally provided via foreign military sales require U.S. authorization, a U.S. State Department official said, speaking on condition of anonymity ahead of Tuesday’s announcement. The official didn’t indicate whether Canada’s purchase would be approved.

The State Department reviews and approves all proposed transfers of U.S. military equipment, and doesn’t comment on the status of pending sales or transfers until it has completed all necessary consultations, according to a spokesperson for the U.S. Embassy in Ottawa.

‘On Track’

Canada will consider the F-35 as its permanent replacement, Qualtrough told CTV in November. Defense Minister Harjit Sajjan said in February he “will not be buying used aircraft for our air force,” a pledge jettisoned by Tuesday’s announcement.

Ferguson said Canada could buy Dassault Aviation SA’s Rafale or the Eurofighter Typhoon -- produced by a consortium including BAE Systems Plc, Airbus Group SE and Leonardo SpA -- but they would cost as much as F-18s, and would lack commonality with U.S. forces and with the current fleet. “Then I bet they are back for F-18s or F-35s if they’re more concerned with future air combat capabilities,” he said.


The F-35 will be adopted by the U.S. and its allies at an accelerating rate in the coming years, and commonality is key, according to Douglas Rothacker, an analyst at Bloomberg Intelligence. If Canada’s decision to buy the Australian jets eliminates Boeing’s F-18 as an option for the country’s long-term fighter solution, that’s “positive for Lockheed’s F-35 potential in Canada,” said Rothacker, adding Canada is a key manufacturing partner and its tentative 65 F-35 orders are still considered within the program of record.

— With assistance by Anthony Capaccio, Roxana Tiron, and Frederic Tomesco

FDI

StatCan. 2017-12-13. Canada's international investment position, third quarter 2017

• Canada's net international investment position: $298.3 billion, Third quarter 2017
• Source(s): CANSIM table 376-0142: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=3760142&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=

Canada's net foreign asset position fell by $27.9 billion to $298.3 billion in the third quarter, following four consecutive quarterly increases.

The reduction mainly reflected the effect (-$79.8 billion) of an appreciating Canadian dollar, which lowered the value of foreign currency-denominated assets and liabilities when converted to Canadian dollars. In the third quarter, 96% of Canada's international assets were denominated in foreign currencies, compared with 37% for international liabilities.

The stronger performance of foreign stock markets relative to the Canadian stock market moderated the overall decline in the net foreign asset position in the quarter.

Chart 1: Canada's net international investment position

Over the third quarter of 2017, the Canadian dollar gained 4.0% against the US dollar, 0.5% against the euro, 0.9% against the British pound and 4.2% against the Japanese yen. The Canadian stock market rose by 3.0%, compared with gains of 4.0% in the United States and 4.4% in the European stock markets (as measured by the Standard and Poor's 500 and the EuroStoxx).

Chart 2: Contributors to the change in the net international investment position

Canada's international assets down on a stronger Canadian dollar

Canada's international financial assets were down $19.6 billion to $4,458.6 billion at the end of the third quarter. The decrease mainly resulted from a downward revaluation effect of $130.3 billion due to the appreciation of the Canadian dollar against major foreign currencies. The growth of foreign stock markets moderated the overall decrease.

On an instrument type basis, Canadian holdings of foreign equity instruments increased by $26.7 billion to $3,182.4 billion in the third quarter. In addition to higher foreign stock prices, investment by Canadian direct investors in foreign affiliates contributed to the growth.

Meanwhile, Canadian holdings of foreign debt instruments were down by $46.3 billion to $1,276.2 billion. Currency and deposits held abroad by Canadians declined by $28.0 billion to $346.9 billion. At the end of the third quarter, 85% of Canada's international assets in currency and deposits were denominated in foreign currencies.

Chart 3: International assets and liabilities

Canada's international liabilities edge up

Canada's international liabilities edged up $8.3 billion to $4,160.4 billion in the third quarter. The stronger Canadian dollar reduced the value of liabilities by $50.5 billion over the quarter. This change was more than offset by foreign acquisitions and higher Canadian equity prices.

Canadian equity instruments held by foreign direct and portfolio investors increased by $57.6 billion to $1,829.7 billion at the end of the quarter, led by higher equity prices. Foreign portfolio investors held $654.0 billion of Canadian equity and investment fund shares, up $22.2 billion from the second quarter, with most of the growth in shares from the trade and transportation sector.

Foreign holdings of Canadian debt instruments, also referred to as Canada's gross external debt, were down by $49.3 billion to $2,330.7 billion in the third quarter. The decline was mainly in the banking sector, on lower currency and deposits held by non-residents. Higher foreign holdings of Canadian bonds moderated the overall decline in liabilities due to strong acquisition activity in the quarter. Nearly two-thirds of Canada's gross external debt were denominated in foreign currencies at the end of the third quarter.

Canada's international assets are more exposed to currency fluctuations than liabilities

The currency composition of Canada's international financial assets differs from the composition of its international liabilities, as a higher proportion of the assets are denominated in foreign currencies than the liabilities.

At the end of the third quarter, 62% or $2,746.9 billion of Canada's total international assets were denominated in US dollars, followed by the euro (10%), British pound (6%) and Canadian dollar (4%).

On the other hand, 63% of the country's international liabilities were denominated in Canadian dollars in the third quarter. International liabilities denominated in US dollars represented 29% of all liabilities, followed by the euro at less than 4%.

As a result, fluctuations of the Canadian dollar against foreign currencies have a more important impact on the value of Canada's international financial assets compared with its international liabilities.

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/171213/dq171213a-eng.pdf

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LGCJ.: