CANADA ECONOMICS

ECONOMY

StatCan. 2018-01-04. Canadian Economic News, December 2017 edition

Canadian Economic News provides a concise monthly summary of selected Canadian economic events, and international and financial market developments, by calendar month.

Note

Canadian Economic News is intended to provide contextual information to support users of economic data published by Statistics Canada. In identifying major events or developments, Statistics Canada is not suggesting that these have a material impact on the economic data published for a particular reference month.

All information presented is obtained from publicly available news and information sources and does not reflect any protected information provided to Statistics Canada by survey respondents.This module provides a concise summary of selected Canadian economic events, as well as international and financial market developments by calendar month. It is intended to provide contextua

All information only to support users of the economic data published by Statistics Canada. In identifying major events or developments, Statistics Canada is not suggesting that these have a material impact on the published economic data in a particular reference month.   

All information presented here is obtained from publicly available news and information sources, and does not reflect any protected information provided to Statistics Canada by survey respondents.

Resources

• Calgary-based Husky Energy Inc. announced that its total capital spending for 2018 is expected to be $2.9 billion to $3.1 billion. The company also said its capital spending for 2017, not including the acquisition of the Superior Refinery, remains within guidance at $2.2 billion to $2.3 billion.
• Calgary-based Cenovus Energy Inc. announced it plans to invest between $1.5 billion and $1.7 billion in 2018, with the majority of the budget allocated to sustain base production at the company’s oil sands operations. Cenovus also said it is planning additional workforce reductions of approximately 15%.
• Calgary-based Inter Pipeline Ltd. announced it has authorized the construction of an integrated propane dehydrogenation and polypropylene plant. The company said the facilities, collectively referred to as the Heartland Petrochemical Complex, are estimated to cost $3.5 billion in aggregate and will be located in Strathcona County, Alberta. Completion of the complex is scheduled for late 2021.
• Halifax-based ExxonMobil Canada Ltd. announced that the Hebron platform produced first oil on November 27th. The company said the oil was extracted from the Hebron field in the Jeanne d’Arc Basin, located 350 kilometres offshore Newfoundland and Labrador.
• On December 7th, the United States International Trade Commission (USITC) determined that a U.S. industry is materially injured by reason of imports of softwood lumber from Canada that the U.S. Department of Commerce (DOC) has determined are subsidized and sold in the United States at less than fair value. The USITC said that as a result, the DOC will issue antidumping and countervailing duty orders on imports of this product from Canada. Previously, on November 28th, the Government of Canada announced it had formally requested World Trade Organization (WTO) consultations with the United States concerning the DOC’s recent final anti-dumping and countervailing duty determinations on imports of certain softwood lumber products from Canada.

Manufacturing

• Calgary-based NOVA Chemicals Corporation announced two projects for its Ontario operations involving a capital investment expected to exceed $2.0 billion in the Sarnia-Lambton region. The company said the investment includes the expansion of its Corunna, Ontario cracker and a new polyethylene facility.
• Guelph-based Linamar Corporation announced it had entered into a definitive agreement to acquire 100% of the outstanding equity interests of Winnipeg-based MacDon and its Group of Companies for an aggregate purchase price of $1.2 billion. The company said the transaction is expected to close in the first quarter of 2018, subject to customary regulatory approvals.
• California-based Platinum Equity, LLC announced it had signed a definitive agreement to acquire Husky Injection Molding Systems International Ltd. of Bolton, Ontario from OMERS Private Equity of Toronto and Berkshire Partners of Massachusetts for USD $3.85 billion. The company said the transaction is subject to regulatory approval and is expected to close in the second quarter of 2018.
• Switzerland-based Nestle S.A. announced it had agreed to acquire Atrium Innovations of Montreal for USD $2.3 billion. The company said the transaction is expected to close in the first quarter of 2018 following the completion of customary approvals and closing conditions.
• On December 20th, the U.S. Department of Commerce (DOC) announced its affirmative final determinations in the antidumping duty and countervailing duty investigations of imports of 100- to 150-seat large civil aircraft from Canada. The DOC applied a final dumping margin of 79.82% and a final subsidy rate of 212.39%, and will instruct U.S. Customs and Border Protection to collect cash deposits from importers based on these final rates. The DOC also said the International Trade Commission is scheduled to make its final determinations on or about February 1, 2018.

Finance and insurance

• Scotiabank announced that Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) of Spain had formally accepted Scotiabank’s offer to acquire its 68.19% ownership in BBVA Chile, and its interests in certain subsidiaries, for approximately $2.9 billion. Scotiabank said it had entered into definitive agreements with BBVA and intends to merge BBVA Chile with its existing operations in Chile, subject to regulatory approvals.

Other news

• The Bank of Canada maintained the target for the overnight rate at 1.00%. The last change in the target for the overnight rate was a 25 basis-point increase announced in September 2017.
• On November 28th, the Government of Alberta tabled its 2017-18 Fiscal Update and Economic Statement which included a revised Capital Plan forecast of $8.3 billion, a decrease of $883 million from the budget. The Government forecasts a $10.3 billion deficit in 2017-18 and economic growth of 4.0% in 2017 and 2.5% in 2018.
• On November 29th, the Government of Saskatchewan tabled its Budget Update 2017-18. The Government forecasts a $679 million deficit in 2017-18 and economic growth of 1.5% in 2017 and 2.2% in 2018.
• The Government of British Columbia announced it will complete construction of the Site C hydroelectric dam.
• The Government of Canada announced that Canada’s Finance Ministers agreed to ensure, for two years, that the combined rate of all federal, provincial and territorial cannabis-specific taxes will not exceed the higher of $1.00 per gram, or 10% of a producer’s selling price, and that this tax room will be shared on the following basis: 75% to provincial and territorial governments; 25% to the federal government. The Government also said the federal portion of cannabis excise tax revenue will be capped at $100 million annually and that any federal revenue in excess of $100 million will flow to the provinces and territories.
• The Government of British Columbia announced that: it will set the minimum age to possess, purchase and consume cannabis at 19 years old; the BC Liquor Distribution Branch will be the wholesale distributor of non-medical cannabis in the province; and the Province anticipates establishing a retail model that includes both public and private retail opportunities.
• The Government of Manitoba introduced legislation that would set out where and how legal cannabis may be sold. The Government said Manitoba Liquor and Lotteries would be responsible for acquiring all cannabis for retail sale, while the Liquor and Gaming Authority would be renamed the Liquor, Gaming and Cannabis Authority and would be responsible for licensing cannabis stores and distributors and for compliance enforcement. The Government also said that growing cannabis at home for recreational purposes will be prohibited and that individuals must be aged 19 years or older to buy, possess and use cannabis.
• The Government of Nova Scotia announced key decisions about the legalization of cannabis, including a legal age of 19 years old for use, purchase, and possession, as well as a personal cultivation limit of up to four plants per household. The Government said that distribution and sales of cannabis will be online and in existing Nova Scotia Liquor Corporation stores.
• The Government of Prince Edward Island outlined three directions related to implementing the federal government’s objective of legalizing cannabis, including setting the legal age for cannabis use at 19 years old; restricting cannabis use to private residences; and establishing that cannabis will be sold in dedicated government-owned retail locations as well as through an e-commerce platform.
• Smiths Falls, Ontario-based Canopy Growth Corporation and representatives from the Government of Newfoundland and Labrador announced that Canopy and the Government had entered into a supply and production agreement, securing a regulated supply of cannabis for the province.
• Leamington, Ontario-based Aphria Inc. announced it had entered into an agreement to become a medical cannabis supplier to Shoppers Drug Mart.
• Toronto-based Metrolinx announced it had negotiated new contract terms with Bombardier Transportation for the Eglinton Crosstown light rail transit system in Toronto. Metrolinx said the new agreement is for Bombardier to manufacture 76 light rail vehicles for the Eglinton Crosstown project, 106 vehicles less than the original contract for 182 vehicles.
• Montreal-based Canadian National Railway Company announced it will acquire 200 new locomotives over the next three years from GE Transportation of Illinois. The company said the locomotives will be produced at the GE Manufacturing Solutions facility in Fort Worth, Texas beginning in 2018, and that the first units are expected to be delivered in 2018 with the balance delivered in 2019 and 2020.

United States and other international news

• The U.S. Federal Open Market Committee (FOMC) raised the target range for the federal funds interest rate by 25 basis points to 1.25% to 1.50%. The last change in the target range was a 25 basis point increase announced in June 2017.
• The European Central Bank (ECB) left the interest rate on the main refinancing operations of the Eurosystem unchanged at 0.00%, and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.25% and -0.40%, respectively. The ECB also confirmed that net asset purchases will continue at a monthly pace of €30 billion from January 2018 until the end of September 2018.
• The Bank of England's Monetary Policy Committee maintained the Bank Rate at 0.50%, and the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £435 billion. The last change in the Bank Rate was a 25 basis-point increase in November 2017.
• The Bank of Japan (BoJ) announced it will continue to apply a -0.1% interest rate to the Policy-Rate Balances in current accounts held by financial institutions at the BoJ. The BoJ also said it would continue to purchase Japanese government bonds (JGB) so that 10-year JGB yields will remain at around zero percent.
• The Reserve Bank of Australia maintained the cash rate at 1.50%. The last change in the cash rate was a 25 basis point reduction in August 2016.
• Sweden's Riksbank left its main interest rate, the repo rate, unchanged at -0.5%. The last change in the repo rate was a 15 basis point cut in February 2016. The Riksbank also said that net purchases of government bonds will amount to a nominal value of SEK 290 billion at the end of 2017 and that redemptions and coupon payments in the government bond portfolio will be reinvested until further notice.
• On December 22nd, U.S. President Donald Trump signed into law Bill H.R.1, the Tax Cuts and Jobs Act, which amends the Internal Revenue Code to reduce tax rates and modify policies, credits, and deductions for individuals and businesses.
• The Organization of Petroleum Exporting Countries (OPEC) announced on November 30th that it and certain non-OPEC producing countries had committed to amend the Declaration of Cooperation, originally announced on November 30th 2016, to take effect for all of 2018. OPEC also said it intends to consider the opportunity for further adjustment actions in June 2018.
• The European Council announced on December 15th that, based on the European Commission’s positive assessment, European Union leaders have decided that sufficient progress had been made in the first phase of the Article 50 negotiations with the United Kingdom, allowing the negotiations to proceed to their second phase.
• Germany-based Bombardier Transportation announced it had signed a contract with Corelink Rail Infrastructure and West Midlands Trains to supply 333 new Bombardier Aventra vehicles for use on the United Kingdom’s West Midlands Trains franchise. Bombardier said the overall value of the rolling stock and maintenance contracts are approximately USD $724 million, and that the new trains are expected to be delivered between 2020 and 2022.
• New Jersey-based Toys “R” Us, Inc. announced that, as part of its ongoing financial restructuring efforts, its UK operation has initiated a Company Voluntary Arrangement (CVA) process under which it has submitted an operational restructuring plan to creditors. Toys “R” Us said the process is likely to involve the closure of at least 26 stores, with closures expected to commence in spring 2018.
• Iowa-based Meredith Corporation announced that it had entered into a binding agreement to acquire all outstanding shares of Time Inc. of New York in an all-cash transaction valued at USD $2.8 billion. Meredith said the transaction is expected to close during the first quarter of 2018.
• Massachusetts-based General Electric announced that GE Power plans to reduce its global headcount by approximately 12,000 positions, affecting both professional and production employees.
• California-based The Walt Disney Company and Twenty-First Century Fox, Inc. of New York announced they had entered into a definitive agreement for Disney to acquire Twenty-First Century Fox, including the Twentieth Century Fox Film and Television studios, along with cable and international TV businesses, for a total transaction value of approximately USD $66.1 billion. Disney said the transaction is subject to shareholder and regulatory approvals.
• Israel-based Teva Pharmaceuticals Industries Ltd. announced a restructuring plan that includes closures or divestments of a significant number of manufacturing plants in the United States, Europe, Israel and Growth Markets, as well closures or divestments of a significant number of R&D facilities, headquarters and other office locations across all geographies. The company said these steps are expected to result in the reduction of 14,000 positions globally - over 25% of Teva’s total workforce – over the next two years, with the majority of the reductions expected to occur in 2018.
• United Kingdom/Netherlands-based Unilever PLC announced it had received a binding offer from KKR & Co. L.P of New York to purchase its global Spreads business for €6.825 billion. The company said the offer is subject to certain regulatory approvals and employee consultation in certain jurisdictions, and that completion is expected mid-2018.

Financial market news

• Crude oil (West Texas Intermediate) closed at USD $59.64 on December 27th, up from USD $57.40 at the end of November. The Canadian dollar closed at 79.11 cents U.S. on December 27th, up from 77.59 cents U.S. on November 30th. The S&P/TSX closed at 16,203.13 on December 27th, up from a closing value of 16,067.48 at the end of November.

Department of Finance. January 4, 2018. Official International Reserves. All 2018 Official International Reserves

Ottawa - The Department of Finance Canada announced today that Canada's official international reserves decreased by an amount equivalent to US$180 million during December to US$86,625 million.

Details on the level and composition of Canada's reserves as of December 29, 2017, as well as the major factors underlying the change in reserves, are provided below. All figures are in millions of US dollars unless otherwise noted.

Foreign Currency Reserves

	Millions of US dollars
Securities	68,753
Deposits	7,898
Total securities and deposits (liquid reserves):	76,651
Gold	0
Special drawing rights (SDRs)	7,975
Reserve position in the IMF	1,999
Total:
December 29, 2017	86,625
November 30, 2017	86,805
Net change:	-180

FULL DOCUMENT: http://www.fin.gc.ca/n18/18-001-eng.asp

NAFTA

Agriculture and Agri-Food Canada. January 4, 2018. Canada's Minister of Agriculture and Agri-Food to promote trade and NAFTA at American Farm Bureau Federation Annual Convention in Tennessee

Ottawa, Ontario – The Honourable Lawrence MacAulay, Minister of Agriculture and Agri-Food Canada, will visit Tennessee from January 5 to 8, 2018, where he will deliver a keynote address to the American Farm Bureau Federation's annual convention and participate in activities to promote Canada-U.S. trade.

Minister MacAulay will attend the 99th Annual American Farm Bureau Federation Convention and IDEAg trade show in Nashville, Tennessee. The American Farm Bureau Federation Convention is a gathering of more than 5,000 delegates bringing together agricultural producers from all levels and sector representatives from the local, state and national levels. The American Farm Bureau Federation has confirmed that the President Donald. J. Trump will also be addressing the convention, the first sitting U.S. President to do so since George H.W. Bush in 1992.

"The trading partnership between Canada and the U.S. is one that delivers high-quality foods and supports millions of middle-class jobs on both sides of the border," Minister MacAulay said. "Since the beginning of NAFTA, trade in North American agriculture has quadrupled. We will continue to work closely with representatives at all levels in the U.S. to ensure our agricultural sectors continue to grow and prosper."

While in Nashville, Minister MacAulay will participate in a roundtable with U.S. agricultural producer and business groups. Along with his participation at the American Farm Bureau Convention, Minister MacAulay will host a breakfast for all State Farm Bureau Presidents, meet with Zippy Duvall, President of the American Farm Bureau Federation, Jai Templeton, Commissioner of Agriculture for Tennessee, and meet with U.S. Young Farmers and Ranchers. Minister MacAulay will also have the opportunity to meet with a number of his state counterparts who are attending this convention.

Canada is Tennessee's largest agricultural export market shipping $226 million to Canada including baked goods, prepared breakfast cereal, chocolate products and whiskies. Trade and investment with Canada supports approximately 170,300 jobs in Tennessee.

Minister MacAulay will be available to media while attending the convention.

REUTERS. JANUARY 4, 2018. Canada sends ministers to U.S. to boost NAFTA as key talks loom
David Ljunggren

OTTAWA (Reuters) - The Canadian government is sending three cabinet ministers to the United States to stress the merits of NAFTA, officials said on Thursday, paving the way for key talks that could either sink or save the trade pact.

Canada and Mexico object to major changes that Washington wants to make to the North American Free Trade Agreement, and time is running out to settle differences before the negotiations are scheduled to wrap up at the end of March.

Officials will hold the sixth and penultimate round of talks in Montreal from Jan. 23-28.

One cabinet minister is already in the United States and two more will travel this weekend.

Canada, which sends 75 percent of its goods exports to the United States, has been reaching out to U.S. politicians and the business community for almost two years to bolster support for free trade.

“We recognize we are heading into an important period. We are certainly preparing for all scenarios, and we’re hopeful that we can make progress,” a spokesman for Foreign Minister Chrystia Freeland said when asked about the latest visits.

“That’s what we’re focused on achieving, including in Montreal,” Alex Lawrence, the spokesman, said in an e-mailed statement.

Separate news releases announcing the ministerial trips make clear the cabinet members have been instructed to “promote trade and NAFTA.”

Public Safety Minister Ralph Goodale wraps up a two-day trip to Kentucky on Friday while Agriculture Minister Lawrence MacAulay is due to visit Tennessee over the weekend. At the same time, Environment Minister Catherine McKenna will be in San Francisco.

Canadian officials are increasingly pessimistic about the prospects for the 1994 trade treaty, which U.S. President Donald Trump blames for the loss of hundreds of thousands of U.S. manufacturing jobs and a big trade deficit with Mexico.

In a low-level meeting held in Washington last month between the fifth and sixth rounds, negotiators made some progress on less controversial issues but left untouched the thorniest subjects of the sourcing of auto parts, dispute settlement and an expiry clause.

Trade experts predict that unless Canada and Mexico make some concessions in Montreal, Trump will be more tempted to issue a notice of withdrawal from NAFTA, as he has repeatedly threatened if U.S. demands for change cannot be met.

Reporting by David Ljunggren; Editing by Leslie Adler

ENERGY

REUTERS. JANUARY 4, 2018. JANUARY 4, 2018. Brookfield Business Partners to buy Westinghouse for $4.6 billion
Tom Hals

(Reuters) - An affiliate of Canada’s Brookfield Asset Management Inc BAMa.TO BAM.N plans to acquire Westinghouse Electric Co LLC, the bankrupt nuclear services company owned by Toshiba Corp 6502.T, for $4.6 billion.

Brookfield Business Partners LP BBU.N BBU_u.TO, whose New York-listed shares rose 3.3 percent, said in a statement on Thursday that it and institutional partners would use $1 billion of equity and $3 billion of long-term debt financing to buy the Pittsburgh-based business.

The deal is expected to close in the third quarter.

Westinghouse has said it is aiming to exit bankruptcy as soon as March, which would allow Toshiba to book tax benefits in the current fiscal year.

”Brookfield’s acquisition of Westinghouse reaffirms our position as the leader of the global nuclear industry,” said Westinghouse Chief Executive Officer José Emeterio Gutiérrez.

Toshiba did not immediately respond to requests for comment.

Brookfield Business Partners was an investor in the bankrupt power producer that emerged from Chapter 11 and became Vistra Energy Corp VST.N, and it remains a major shareholder in the Texas company.

Westinghouse is one the world’s leading suppliers of nuclear fuel, and it provides some form of service to 80 percent of the world’s 450 commercial reactors, according to court records.

Those two business lines generated combined cash flow of $403 million on revenue of about $3.1 billion in Westinghouse’s 2015 financial year, according to court records.

However, the company suffered after it agreed to build two plants in the U.S. Southeast on fixed-price contracts. The project went billions of dollars over budget, and Westinghouse filed for bankruptcy in March to escape the contracts.

New nuclear power construction globally has dropped to the lowest level in a decade following renewed safety concerns after the Fukushima disaster in Japan in 2011.

One of Westinghouse’s unfinished U.S. projects, known as Vogtle in Georgia, will continue with Southern Co SO.N replacing the company as the project manager. A South Carolina project known as V.C. Summer was abandoned in July.

The lead utility behind the V.C. Summer project, Scana Corp SCG.N, agreed on Wednesday to a $7.9 billion takeover bid from Dominion Energy Inc D.N.

Westinghouse has joined a consortium bidding to provide nuclear power in Saudi Arabia, one of the biggest new markets in the world. Bringing Westinghouse out of bankruptcy could help close a proposed deal for six of the company’s new AP1000 reactors in India.

Reporting by John Benny in Bengaluru and Tom Hals in Wilmington, Delaware; Additional reporting by Jessica DiNapoli in New York; Editing by Sriraj Kalluvila and Lisa Von Ahn

BLOOMBERG. 4 January 2018. Brookfield to Buy Westinghouse's Global Nuclear Business
By Tiffany Kary  and Scott Deveau

• Apollo, Blackstone and Cerberus said to have vied for assets
• Deal marks Canadian firm’s first foray into nuclear business
• Brookfield to Acquire Westinghouse for $4.6 Billion

Bloomberg’s Erik Schatzker reports on Brookfield’s purchase of Westinghouse Electric.
The future of Westinghouse Electric Co.’s global nuclear business now rests in the hands of Brookfield Asset Management Inc.’s private equity arm.

Canada’s biggest alternative asset manager agreed to buy what remains of the former nuclear energy powerhouse’s U.S. business, as well as its non-bankrupt European business, for $4.6 billion. It’s the first foray into the nuclear sector for Brookfield Business Partners LP, a publicly traded unit.

The deal marks a positive turn in a long saga of financial woes stemming from U.S. reactor projects that dragged Westinghouse into bankruptcy, ensnared its parent, Toshiba Corp., and also battered U.S. utilities that had taken on their construction.

“Brookfield’s acquisition of Westinghouse reaffirms our position as the leader of the global nuclear industry,” Westinghouse Chief Executive Officer Jose Emeterio Gutierrez said in a Thursday statement. He said the deal will transform the company into a stronger, more streamlined business.

Competitive Bids

Brookfield has a plan to reorganize its bankrupt U.S. assets as well, according to a person with knowledge of the sale. The deal, which still needs court and regulatory approval, was reached last night, said the person, speaking on condition of anonymity because some details are not yet public.

The transaction is expected to be funded with approximately $1 billion of equity, approximately $3 billion of long-term debt financing, and the balance by the assumption of certain pension, environmental and other operating obligations, according to a statement from Brookfield. Brookfield Business Partners said it will fund roughly half of the equity on closing using existing funds and may syndicate some of the investment to other institutional investors at a later date.

Blackstone Group LP and Apollo Global Management LLC had teamed up on a competing bid for the company, and Cerberus Capital Management LP had also submitted a bid, according to a different person with knowledge of the matter, who also requested to not be identified because the bidding was private. The firms had been reported for months to be circling the assets, and Apollo had also faced competition to extend an operating loan to the company at the outset of its bankruptcy.

Representatives for Blackstone and Apollo weren’t immediately available for comment. Cerberus declined to comment.

Peter Grauer, chairman of Bloomberg LP, is a non-executive director at Blackstone.

Innovation Reputation

“Westinghouse is a high-quality business that has established itself as a leader in its field, with a long-term customer base and a reputation for innovation,” Cyrus Madon, CEO of Brookfield Business Partners, said in the statement.

Since filing for bankruptcy in March, Westinghouse said it planned to get out of the business of building new reactors and focus on servicing them, including decommissioning work. Since then, reports have surfaced that the Trump administration is encouraging Saudi Arabia to consider bids by Westinghouse and other U.S. companies to build reactors -- a politically controversial bid considering previous U.S. agreements prohibited the enrichment of uranium.

The deal won’t include what had been the company’s most prized projects -- plans to build its AP1000 reactors for U.S. utilities in South Carolina and Georgia. Those projects, plagued by delays and cost overruns, eventually led to its downfall, and Westinghouse has used the Chapter 11 process to distance itself from any obligations to them.

Biggest Deal

It’s Brookfield Business Partners’s biggest deal so far, and is expected to close in the third quarter of 2018. Brookfield also agreed to buy significant assets in the wind and solar energy industry that had been ensnared in SunEdison Inc.’s bankruptcy.

The deal includes Westinghouse’s business in Europe, the Middle East and Africa, which had remained outside of bankruptcy protection, while at the same time drawing on some of the financing that the bankrupt units obtained from Apollo.

Westinghouse had backed out of the two U.S. projects after it filed for Chapter 11, setting off a chain of events for the utilities involved. In South Carolina, owner Scana Corp. decided to abandon the new reactors, sparking a political backlash that prompted federal and state investigations. In past days, Dominion Energy Inc. has offered to buy Scana.

In Georgia, Southern Co. agreed to take over its nuclear project from Westinghouse and won approval from state regulators last month to finish two new units despite total costs that soared to about $25 billion.

Designed to be safer than reactors of old, the Westinghouse AP1000 design was supposed to revive an industry plagued by the accident at Three Mile Island in 1979. Instead, delays and overruns led to troubles that left Westinghouse’s former parent, Toshiba Corp., fighting for survival last year after writing down the value of the unit by billions.

Toshiba had bought the unit for $5.4 billion in 2006, before a wave of industry troubles including Japan’s 2011 Fukushima meltdown and a flood of cheap natural gas in the U.S.

— With assistance by Mark Chediak, Erik Schatzker, and Tina Davis

FOREIGN POLICY

The Globe and Mail. 4 Jan 2018. What will it take for Trudeau to split from Harper?
JOHN IBBITSON

In many spheres, there is a lot more continuity than discontinuity. This is surprising because in ideology and philosophy, instincts and inclinations, the mindsets of the two men are a mile apart. 

PAUL EVANS INTERNATIONAL RELATIONS SPECIALIST AT THE UNIVERSITY OF BRITISH COLUMBIA

PM has long touted differences between him and his predecessor, but their records on foreign policy present glaring similarities

Over the past two years, Justin Trudeau has closely adhered to Stephen Harper’s foreign policy. One of the questions of 2018 is whether the Liberals will continue to imitate the Conservatives or strike out on their own.

That the Liberals have been so, well, Conservative in global affairs must come as a surprise to those who loathed the Harper government’s contempt for the United Nations, hostility toward Russia, on-again-off-again approach to China, frayed relations with Washington and foot-dragging on climate change.

“Foreign posture has replaced foreign policy,” complained Paul Heinbecker, former Canadian ambassador to the UN, in the Literary Review of Canada.

“In most domains that matter on the world stage, Canada has actually lost influence: it is now punching below, and no longer above, its weight,” lamented Gerd Schonwalder, at the University of Ottawa’s Centre for International Policy Studies.

And former prime minister Brian Mulroney castigated his Conservative successor for allegedly diminishing Canada’s standing in the world. “We’re in the big leagues … so we have to conduct ourselves in that way,” he said in a CTV interview. “We can’t be out-riders.”

Mr. Trudeau promised to restore Canada’s traditional commitments to multilateral institutions, human rights and environmental protection.

“Canada is back, my friends,” the new PM declared at the Paris talks on climate change in 2015. “We’re here to help.”

And yet, although the tone of the Liberal administration is more inclusive and less partisan than its Conservative predecessor, there has been little change “in the substance of policy,” observed Kim Richard Nossal, a political scientist at Queen’s University, in an interview.

“In many spheres, there is a lot more continuity than discontinuity,” noted Paul Evans, an international relations specialist at the University of British Columbia. “This is surprising because in ideology and philosophy, instincts and inclinations, the mindsets of the two men are a mile apart.”

The Harper government negotiated a free-trade agreement with the European Union; the Trudeau government secured ratification.

Under Mr. Harper, Canada joined the Trans-Pacific Partnership negotiations, but only because the Americans had belatedly signed on to the talks; now that U.S. President Donald Trump has pulled the United States out of the TPP, Mr. Trudeau is wavering on whether Canada should stay in.

Mr. Harper was, at first, openly hostile to the Communist regime in Beijing, but eventually agreed to seek improved relations. Mr. Trudeau is much more outwardly positive in his approach, but refused to commit Canada to free-trade talks after visiting Beijing in December. On China, both Liberals and Conservatives want to get close, but not too close.

The Harper government confronted Russia over its annexation of Crimea and generally bad international behaviour. The Trudeau government has expanded sanctions and now leads a NATO battle group in Latvia.

Mr. Trudeau vowed to replace Conservative militarism with Liberal peacekeeping. But on his watch, the number of Canadians in blue helmets has gone down rather than up.

“The waiting game continues,” said Walter Dorn, a peacekeeping expert at the Canadian Forces College in Toronto, after the latest non-announcement in November.

Mr. Trudeau is far more assertive than his Conservative predecessor on the need to combat global warming. But the government has only committed itself to meeting the targets set by the Conservatives.

On defence procurement, foreign aid and relations in the Middle East, the rhetoric has changed, but the policies remain substantially the same.

Prof. Nossal attributes this unexpected continuity to “a Liberal Party in third place in 2015 that did not have a terribly clear idea about foreign policy and international politics.” After the Liberals came to power, he believes, they were “struck by the realities of world politics.”

Dr. Evans agrees. “The Middle Power flag the Liberals had hoped to fly high is only partially unfurled,” he believes, in part because the Liberals have been too preoccupied with the challenges posed by Mr. Trump.

While the President approved the Keystone XL pipeline that Barack Obama had blocked, to Mr. Harper’s chagrin, his threat to terminate the North American free-trade agreement is several orders of magnitude more dangerous for Canada.

And here we may finally see a parting of the ways between the Liberals and the Conservatives. If, as many observers suspect, the renegotiations break down and Mr. Trump terminates the accord, “it will be interesting to see where [Conservative Leader Andrew] Scheer and his crew come down,” Prof. Nossal says.

Mr. Harper has written that Canada should seek the best available agreement with the United States, and let Mexico fend for itself. Mr. Trudeau, thus far, is committed to solidarity with Mexico.

Will he sustain that commitment if push comes to shove? And will Mr. Scheer agree with his predecessor that any deal is better than no deal at all?

We may soon learn whether the Liberals and Conservatives finally and fundamentally disagree on a major foreign-policy priority, or whether on this file, too, Mr. Trudeau is simply Mr. Harper with more interesting socks.

________________

LGCJ.: