CANADA ECONOMICS

NAFTA

Global Affairs Canada. January 19, 2018. Trade litigation update from the Government of Canada

Ottawa, Ontario - In accordance with statutory deadlines, the Government of Canada today filed requests for panel reviews under NAFTA Chapter 19, following the U.S. Department of Commerce’s final subsidy and dumping determinations of duty rates of nearly 300% on future imports of Bombardier’s C Series aircraft‎.

The Government of Canada ‎today also filed a request for a panel review under NAFTA Chapter 19, following the U.S. International Trade Commission’s final determination of material injury on Canadian softwood lumber products.

These notices are necessary procedural steps in the appeal process against U.S. decisions to impose duties on imports of Bombardier C Series aircraft and softwood lumber from Canada.

Global Affairs Canada. January 19, 2018. Minister of International Trade to promote benefits of NAFTA and progressive trade in Montreal

The Honourable François-Philippe Champagne, Minister of International Trade, will deliver a keynote speech to the Montreal Metropolitan Chamber of Commerce and co-host a NAFTA roundtable with Quebec’s Minister of the Economy, Science and Innovation, Dominique Anglade, in Montreal on Monday, January 22, 2018. Media are invited to a photo and video opportunity at the NAFTA roundtable.

Date: Monday, January 22, 2018
Time: 10:30 a.m. (ET)
Location: Intercontinental Montreal, second floor, 360 Saint-Antoine West, Montreal, Quebec

While in Montreal, Minister Champagne will also meet with business leaders, the mayor of Montreal, Mrs. Valérie Plante, and key influencers on NAFTA and Canada’s progressive trade agenda.

Backgrounder

North America’s global competitiveness has been a dynamic driver of middle-class growth and economic activity. Facilitating trade and commerce with large markets, such as the United States and Mexico, is essential. As a result, modernizing and updating NAFTA continues to be a key priority for the Government of Canada.

In Montréal, Quebec, on January 22, 2018, the Honourable François-Philippe Champagne, Minister of International Trade, will deliver a keynote speech to the Chamber of Commerce of Metropolitan Montreal and co-host a NAFTA round table with Dominique Anglade, Quebec’s Minister of the Economy, Science and Innovation. The province of Quebec shares many border crossings with the United States, and two-way merchandise trade was valued at close to $81 billion in 2016.

During his visit to Montréal, Minister Champagne will reiterate that the Government of Canada is determined to ensure the benefits of trade extend to the middle class and those working hard to join it.

Quotes

“Trade and investment creates well-paying middle-class jobs for Canadians and opens the doors to new markets for Canadian businesses. We are working hard with our U.S. and Mexican counterparts to find solutions to modernize NAFTA because our economies are stronger together.”

- The Honourable François-Philippe Champagne, Minister of International Trade

“For 24 years, NAFTA has created opportunities, jobs and a better life for our citizens. This is why from day one of the negotiations Canada has brought concrete proposals on how we can modernize NAFTA to the benefit of Canadians, Americans and Mexicans. We are focused on achieving real progress, including in Montréal‎ in the coming days.”

- The Honourable Chrystia Freeland, Minister of Foreign Affairs

Quick facts

• Canada and the United States have one of the largest trading relationships in the world. Canada is the largest market for the United States—larger than China, Japan and the United Kingdom combined.
• In 2016, total Quebec merchandise exports to the United States had an estimated value of $57.1 billion. The province accounts for a total of 14.5% of Canadian exports to the United States.
• The North American economy has grown significantly, thanks to NAFTA. Since 1994, when the agreement came into force, the total value of the combined Canada-United States-Mexico trading relationship has increased threefold to almost $1.25 trillion.

NAFTA news: http://www.international.gc.ca/trade-commerce/consultations/nafta-alena/important_news-nouvelles_importantes.aspx?lang=eng
NAFTA resources: http://www.international.gc.ca/trade-commerce/consultations/nafta-alena/toolkit-outils.aspx?lang=eng#factsheet

Canada Revenue Agency. January 19, 2018. Minister Lebouthillier meets with Québec City area businesses to discuss the modernization of the North American Free Trade Agreement

Québec, Quebec – The Government of Canada is listening to Canadians from across the country and from all sectors and backgrounds about trade, including through roundtable discussions that focus on the need to support our goals of providing stable, rewarding and well-paying jobs for Canadians and helping grow our middle class. Canada, the United States and Mexico are working together to modernize the North American Free Trade Agreement (NAFTA). At the same time, the Government of Canada continues to pay close attention to Canadians’ views on trade and its importance to economic development.

Today, the Honourable Diane Lebouthillier, Minister of National Revenue, together with Joël Lightbound, Parliamentary Secretary to the Minister of Finance, and Jean-Claude Poissant, Parliamentary Secretary to the Minister of Agriculture and Agri-Food, met with Québec area businesses for a roundtable organized in collaboration with Québec International, an economic development agency that promotes the city’s businesses on the international market.

Discussions focused on how modernizing NAFTA could significantly support the growth of regional businesses—especially for small and medium-sized businesses that export to the United States and Mexico—and for creating and maintaining quality jobs for the middle class. The roundtable primarily brought together representatives of small and medium-sized businesses and American subsidiaries operating in the region.

Quotes

“Canada’s trade relationships are essential to the prosperity of regional small and medium-sized businesses. This is the case for a number of eastern Quebec businesses that owe part of their success in recent years to increased trade. Our government recognizes the importance of including the views and recommendations of these businesses as we actively work to modernize NAFTA so that trade remains an engine of growth for the North American economy.”

The Honourable Diane Lebouthillier, Minister of National Revenue

“The Government of Canada supports free and fair trade and recognizes the importance of supporting progressive trade agreements that open markets to Canadian goods and services. A sound NAFTA would help support the growth of exporting businesses in the Québec City area and would create and maintain good jobs for the middle class.”

Joël Lightbound, Parliamentary Secretary to the Minister of Finance

"The meeting, which took place today on Québec International's premises, was an opportunity to consult businesses in the region and discuss the issues and challenges they face regarding cross-border trade. These discussions have once again confirmed the vital role that trade plays in the growth of our businesses and the prosperity of our economy. We will therefore continue to actively support the industries covered by NAFTA.”

Carl Viel, President and CEO, Québec International

Quick Facts

• The North American economy has grown significantly thanks to NAFTA. Since 1994, our combined trading relationship has increased three-fold to almost US$1 trillion in value.
• NAFTA created new opportunities for businesses and workers and improved the lives of our citizens in all three countries.

Canada and United States relations: http://international.gc.ca/world-monde/united_states-etats_unis/relations.aspx?lang=eng
Trade Commissioner Service - Mexico: http://tradecommissioner.gc.ca/mexico-mexique/index.aspx?lang=eng
North American Free Trade Agreement (NAFTA) - Resources: http://www.international.gc.ca/trade-commerce/consultations/nafta-alena/toolkit-outils.aspx?lang=eng

Global Affairs Canada. January 21, 2018. Foreign Affairs Minister to meet with Mexico’s Economy Secretary

The Honourable Chrystia Freeland, Minister of Foreign Affairs, will hold a bilateral meeting with Ildefonso Guajardo, Secretary of Economy for Mexico.

Event: Photo opportunity only
Date: Monday, January 22, 2018
Time: 9:45 a.m. ET
Location: Suite 2400, 150 King Street West, corner of King Street W and University, Toronto, Ontario

North American Free Trade Agreement (NAFTA) – Consultation events: http://www.international.gc.ca/trade-commerce/consultations/nafta-alena/index.aspx?lang=eng&menu_id=260

Environment and Climate Change Canada. January 19, 2018. Minister McKenna to promote NAFTA, in Mexico City, Houston, and Miami

Ottawa, Ontario – The Government of Canada is working closely with its partners in the United States and Mexico to strengthen its trade relationships and create new jobs and opportunities for workers, businesses, and middle-class families.

As part of these efforts, the Minister of Environment and Climate Change, Catherine McKenna, will visit Mexico City, Houston, and Miami from January 22nd to January 24th,  to meet with government leaders, climate scientists, and businesses to promote trade, jobs, climate solutions, and clean technology.

In Mexico City, Minister McKenna will meet with Rafael Pacchiano Alamán, Secretary of Environment and Natural Resources, to discuss the ongoing NAFTA negotiations on the environment chapter and the Canada-Mexico collaboration on climate change and ocean health.

In Houston and Miami, Minister McKenna will meet with government leaders and clean-technology companies to promote the importance of NAFTA as an engine of clean growth and prosperity. She will also meet with scientists working to help communities adapt to the impacts of climate change, including floods and other natural disasters.

During her visit, Minister McKenna will also host round tables with business leaders to advance opportunities for Canadian companies and workers, particularly in green technologies, and to meet with youth to discuss climate action and practical solutions to the impacts of climate change.

Quotes

“NAFTA has brought economic growth and rising standards of living for people in Canada, the U.S., and Mexico. By modernizing NAFTA and working together on practical climate solutions and clean innovation, we can continue building a strong foundation for a clean-growth economy that will support our children and grandchildren.”

– Catherine McKenna, Minister of Environment and Climate Change

“For 24 years, NAFTA has created opportunities, jobs, and a better life for our peoples. This is why, from day one of the negotiations, Canada has brought concrete proposals on how we can modernize NAFTA to the benefit of Canadian, American, and Mexican citizens. We are focused on achieving real progress, including in Montréal,‎ in the coming days.”

– Chrystia Freeland, P.C., M.P., Minister of Foreign Affairs

Quick Facts

• Mexico is Canada’s third largest trading partner and in 2016, Canada reached a milestone with bilateral merchandise trade totalling C$40.8 billion.
• Canada and the United States share the world’s longest secure border, over which approximately 400 000 people and goods and services worth US$1.8 billion cross daily.
• Canada and the United States share one of the largest trading relationships in the world. Canada is the largest market for the United States—larger than China, Japan, and the United Kingdom combined.
• Canada is the number one export destination for most American states, and cross-border trade and investment support nearly 9 million jobs in the United States.
• There are over 460 Canadian-owned companies operating in Florida, and the numbers are growing every year. These companies are directly responsible for over US$1.8 billion in salaries.
• Canada's Enbridge produces enough electricity to supply 33 000 homes in Texas, through its Keechi Wind Project—55 wind turbines with 110 megawatts of capacity—near Jacksboro, Texas.

Mexico fact sheet: http://www.canadainternational.gc.ca/mexico-mexique/fs_mexico-fd_mexique.aspx?lang=eng
Canada and United States relations: http://international.gc.ca/world-monde/united_states-etats_unis/relations.aspx?lang=eng
State trade fact sheets: http://international.gc.ca/world-monde/united_states-etats_unis/business_fact_sheets-fiches_documentaires_affaires.aspx?lang=eng#florida

DoS. January 19, 2018. U.S.-Canada High-Level Policy Review Group Meets in Washington, D.C.

Washington, DC - Under Secretary of State for Political Affairs Thomas Shannon and Canadian Assistant Deputy Minister for International Security and Political Affairs Mark Gwozdecky co-chaired the eleventh U.S.-Canada High-Level Policy Review Group on January 19, in Washington, D.C. The Review Group, which last met in Ottawa on June 1, 2017, discussed a broad range of bilateral, regional, and global issues on which the United States and Canada cooperate.

The United States welcomes the opportunity to further enhance cooperation and collaboration through the High-Level Policy Review Group. Such meetings advance the United States’ and Canada’s common objectives around the world. The United States looks forward to further strengthening the relationship between the United States and Canada through global partnership.

The Globe and Mail. 22 Jan 2018. Amid NAFTA uncertainty, Trudeau heads to Davos to champion Canada as an attractive place to invest
ROBERT FIFE, OTTAWA BUREAU CHIEF

In the face of uncertainty over the North American free-trade agreement, Prime Minister Justin Trudeau will champion Canada as an attractive place to invest at the annual gathering of the global elite held in the Swiss Alps.

Mr. Trudeau intends to play down U.S. President Donald Trump’s threat to abrogate NAFTA in meetings with corporate executives at the World Economic Forum, a government official told The Globe and Mail. The Prime Minister and senior cabinet ministers – Foreign Affairs Minister Chrystia Freeland, Finance Minister Bill Morneau and Innovation Minister Navdeep Bains – leave Monday for Davos as the sixth round of NAFTA talks takes place in Montreal this week.

Mr. Trump had planned to be at the chic Swiss ski resort to push his America First trade agenda, accompanied by top White House advisers and cabinet secretaries, but the U.S. government shutdown has made his schedule uncertain.

The official said the Prime Minister, who is not expected to meet Mr. Trump, will tell business leaders he remains confident that negotiators can update NAFTA and boost continental trade.

He will also tell them Canada is prepared for the possibility that Mr. Trump might give the required sixmonths notice to pull out of NAFTA, but the official noted there is widespread support for the continental treaty in Congress, the U.S. business community and in American states that trade with Canada and Mexico. Canadian Chamber of Commerce president Perrin Beatty said Mr. Trudeau needs to do more than say Canada is a good place to invest, especially with NAFTA under threat and the U.S. slashing taxes.

“By all means he should be going out and promoting Canada in a very positive way but we have to get our house in order here in Canada,” Mr. Beatty said in an interview on Saturday. “We need to make sure that the tax and regulatory environment that both domestic and foreign investors are looking at are attractive in Canada.”

Bank of Canada Governor Stephen Poloz recently warned that uncertainty over NAFTA could derail the Canadian economy. Corporations are delaying investment decisions and some might be diverting money that was planned for Canada, he said.

“Obviously there is uncertainty that the Bank of Canada pointed to regarding NAFTA, but what tends to get missed are the dramatic changes being made in the tax and regulatory regime in the U.S.,” Mr. Beatty said. “What we have seen is the most massive tax and regulatory reform in our lifetime, all designed to make the American system more competitive.”

Mr. Beatty pointed to Apple Inc.’s announcement this week that it is repatriating over a quarter of a trillion dollars to the U.S. because of the tax and regulatory changes. Unless Canada follows the U.S. lead, investment dollars will flow south of the border, he warned.

During his three days in Davos, Mr. Trudeau will pitch Canada in private meetings with executives from Coca-Cola, Microsoft, Google, Royal Dutch Shell and other large multinational corporations.

In a keynote speech on Tuesday, Mr. Trudeau will talk up Canadian investment opportunities and highlight his belief in progressive trade and gender equality.

Opposition MPs question, however, why Mr. Trudeau is going to the annual retreat of billionaires, Hollywood celebrities and politicians.

“It is just really rich, famous people talking to other rich, famous people while workingclass Canadians are wondering how their lives might get better,” NDP ethics critic Nathan Cullen told The Globe.

Mr. Cullen said he’d be supportive of the Davos trip if Mr. Trudeau would tell the superrich that Canada will tax their stock options and crack down on offshore tax havens.

“If he said, ‘Time is up and you are going to have to start paying some taxes,’ then that would be worth the trip, but I suspect he is not going to do that,” Mr. Cullen said. “If you are a billionaire, you are still sipping Champagne and eating caviar and, in fact, are doing better under this government.”

Conservative ethics critic Peter Kent said he doesn’t believe Mr. Trudeau will accomplish very much at Davos other than to have selfies taken with Hollywood stars and rock musicians.

“Davos has become more and more of a celebrity, starstudded event and it is not surprising the Prime Minister has chosen to go again,” Mr. Kent said.

Mr. Trudeau skipped last year’s summit to avoid criticism of hobnobbing with the global elite in the aftermath of revelations that he had holidayed at the Bahamas island retreat of the Aga Khan.

In 2016, Mr. Trudeau threw a reception at the upscale Grischa Hotel in Davos that attracted now disgraced House of Cards actor Kevin Spacey, Irish rock star Bono and British bon vivant Richard Branson, founder of Virgin airlines. At the same event, the Prime Minister was spotted with movie star Leonardo DiCaprio.

“I think the Prime Minister is going for relationship building and not for effective, meaningful official business,” Mr. Kent said.

Oxfam Canada is urging Mr. Trudeau to use Davos as a stage to preach against the evils of corporate greed.

A new report by Oxfam shows that 82 per cent of global wealth generated last year went to the richest 1 per cent. In Canada, billionaire wealth has grown by $28-billion since 2016.

“It’s hard to find a politician or business leader who doesn’t say they are worried about inequality.

“It’s even harder to find one who is actually doing something about it,” said Winnie Byanyima, executive director of Oxfam International.

Oxfam Canada policy director Kate Higgins said the Prime Minister should encourage world leaders to crack down on corporate tax avoidance, eliminate the gender pay gap and protect the rights of female workers.

“Our estimate is that 1.5 per cent of billionaires’ wealth could pay for every child to go to school … and we really think the Canadian government can take a leadership role on this,” she said.

The themes of this year’s Davos conference, which takes place Jan. 23-26, are to examine how the global community can confront climate change and the fallout from globalization, and how to adapt to technological revolutions such as artificial intelligence and cryptocurrencies.

The Globe and Mail. 22 Jan 2018. Fear of NAFTA collapse could be as big a problem as collapse itself
Clark Campbell, Columnist

Donald Trump’s suggestions that he’ll be “flexible” about the deadline for NAFTA talks settled down the markets, but Canadian officials aren’t feeling much of a respite.

The sixth round of talks will be held in Montreal this week, and there’s only moderately less tension over the potential for the whole thing to go off the rails soon.

Welcome to Year 2 of Mr. Trump’s nervy North American free-trade agreement ride. At some point in 2018, the ups and downs might be just as dangerous for Canada’s economy as the potential crash of NAFTA withdrawal.

Less than two weeks ago, the mood meter on the NAFTA talks shifted rapidly from pessimistic to downright jumpy to a deep sigh of relief. The latter two probably weren’t justified.

The swing started with the headline on a Reuters story suggesting Canadian officials were sure Mr. Trump was about to trigger a U.S. withdrawal from NAFTA, knocking the value of the Canadian and Mexican currencies and stocks in companies that rely on cross-border trade.

But the jitters vanished a day later when Mr. Trump told the Wall Street Journal he’d be “a little bit flexible” on the deadline for the talks because he understands Mexico might not be able to do a deal just before its presidential election July 1.

It sounds like crunch time is being delayed. The Mexican election is in July, but the new president won’t be inaugurated until Dec. 1. That suggests a deal can wait until 2019.

Canadian officials were encouraged. But not much. They can’t count on Mr. Trump’s comments about flexibility. It’s a cliché to call him unpredictable.

Mr. Trump certainly has other things on his plate. For the past week, it was talks over the U.S. government shutdown, which led to questions about whether U.S. negotiators will even show up for NAFTA talks in Montreal. (They will.)

But the shutdown drama also showed that when Mr. Trump’s commitment to his basics is challenged – the wall, immigration crackdowns, ripping up NAFTA – he returns with atavistic zeal.

After his chief of staff, John Kelly, said Mr. Trump’s view of the wall had evolved from an uninformed view, Mr. Trump tweeted nothing had changed, and that Mexico could pay for the wall through a renegotiated NAFTA. That probably hardened the impasse over the shutdown, and may complicate NAFTA talks further.

The bigger point is that Mr. Trump still talks constantly about NAFTA withdrawal. Maybe he’ll just keep talking through the U.S. midterm elections, but he hasn’t given any hint of a way to stop it.

Foreign Affairs Minister Chrystia Freeland has said Canada will put forward “creative” proposals in Montreal. One is a “compromise” on U.S. demands for higher American content in cars. Canada is proposing counting more high-value items such as software, and less low-value items Such as rubber parts – essentially trying to increase the content number by changing the way it is counted. That’s creative, but can it move Mr. Trump?

In the meantime, Innovation Minister Navdeep Bains was at the Detroit auto show touting Canada as a place for auto makers to invest, enthusing about Canada’s advantages, including the government’s willingness to invest in “innovation,” but dodging the uncomfortable NAFTA questions that could scare off investors.

That risk is a problem Prime Minister Justin Trudeau will face in 2018. It’s no longer just the risk that Mr. Trump will suddenly withdraw from NAFTA. Mr. Trudeau is lobbying U.S. business about the danger of killing NAFTA, but at some point, Canada’s interests may depend on reassuring investors that Canada’s trade will go on after NAFTA.

NAFTA fear does affect investment. That little political-news swing two weeks ago not only affected Mexican and Canadian currencies, but stocks of U.S. companies that depend on cross-border trade.

Morgan Stanley’s NAFTA index fell 1.21 per cent on the day of that Reuters headline, but bounced back more than double, 2.84 per cent, with Mr. Trump’s “flexible” comments. Last October, as the United States started tabling tough negotiating positions, the index fell 5.93 per cent between Oct. 4 and Nov. 15. Those investment effects were short-lived, but they could deepen this year, with the prospects for NAFTA talks immersed in pessimism, and the constant prospect Mr. Trump will suddenly kill it.

For Mr. Trudeau’s government, it means a tough decision: When will lobbying to save NAFTA give way to reassuring business that its demise won’t kill Canada’s ability to trade?

REUTERS. JANUARY 22, 2018. NAFTA's fate uncertain ahead of final round of talks in Montreal
David Ljunggren

OTTAWA (Reuters) - The NAFTA trade agreement’s future hangs in the balance this week as negotiators from the United States, Canada and Mexico try to settle major differences over revamping a pact that President Donald Trump has threatened to abandon.

Senior officials from the three nations will meet in Montreal for a week starting on Tuesday in the sixth and last round of talks to modernize the 1994 North American Free Trade Agreement.

Trump, who entered office last year pledging to undo what he described as disastrous trade deals, has portrayed NAFTA as grossly unfair to the United States and its workers.

Canada and Mexico, which initially dismissed most of Washington’s demands as unworkable, now say there is room to maneuver. But that still may not be enough to satisfy Trump and impatient U.S. officials.

U.S. threats to walk away from NAFTA, which underpins much of the more than $1 trillion in annual trilateral trade among the three nations, have put markets on edge. The talks are supposed to wrap up by the end of March to avoid clashing with Mexico’s general elections in July.

Trump, who blames NAFTA for killing off hundreds of thousands of U.S. manufacturing jobs and says it has led to a large U.S. trade deficit with Mexico, tweeted last Thursday that “NAFTA is a bad joke!”

Over the last 10 days the Republican president has generated confusion by indicating that he might extend the deadline for talks while saying that walking away from the table would be the best idea.

A council advising Canadian Foreign Minister Chrystia Freeland on NAFTA has concluded that Washington is most likely to announce that it wants out of the pact. It met with Freeland last week.

“There is still a shred of optimism, but I have to say the consensus around the room ... felt like it’s not if, it’s when he’s going to pull the plug,” Rona Ambrose, a council member and former Canadian minister, told CTV television.

That pessimism is in stark contrast to a large majority of economists polled by Reuters who are betting the treaty will be renegotiated successfully with only marginal changes.

Freeland, who also says a positive result is still possible, is due to meet Mexican Economy Minister Ildefonso Guajardo in Toronto on Monday.

CAUTIOUS OPTIMISM
Canada and Mexico initially said they would not even discuss U.S. demands to set minimum levels of North American content for the auto sector, a clause that would terminate the deal if it is not renegotiated every five years, and end the so-called Chapter 19 dispute mechanism.

Sources close to the talks say Canada and Mexico will now be more flexible on the auto content and dispute resolution issues.

“We have got areas we are going to fight for, obviously, but that doesn’t mean we can’t be creative, nimble, clever,” said one Canadian source familiar with Ottawa’s strategy.

“There can be very strong lines (in the sand) ... it’s not to say you don’t talk around them. Sometimes you find creative ways without necessarily compromising,” said the source, who requested anonymity given the sensitivity of the situation.

In Mexico, some of the pessimism palpable in late December has given way to cautious optimism that progress towards a deal is possible in Montreal if the Trump administration is prepared to give ground on its toughest proposals.

Jaime Zabludovsky, one of the Mexican negotiators of the original NAFTA accord and an adviser to the private sector on the current talks, said the final round of negotiations would be a decisive test of the countries’ ability to make progress.

“I think we’re at a make-or-break moment,” he said in an interview.

One Mexican source familiar with the process said he expected further talks through March and mentioned the possibility the final discussions could, if necessary, be postponed until after the Mexican elections.

Despite a U.S. government shutdown, Washington will send a team to the Montreal talks, a Trump administration source said.

Additional reporting by Dave Graham in Mexico City and Lesley Wroughton in Washington; Editing by Christian Plumb and Paul Simao

BLOOMBERG. 22 January 2018. U.S. Turns Up the Heat in Pivotal New Phase of Nafta Talks
By Josh Wingrove , Andrew Mayeda , and Eric Martin

• Trump ties talks to Mexico wall as U.S. complains about Canada
• Sixth round of negotiations running until Jan. 29 in Montreal

Nafta talks are entering a pivotal moment as the U.S. turns up the pressure on Canada and Mexico to radically alter the trade pact in favor of American interests.

In the run-up to the sixth round of talks that are now underway in Montreal, there’s been plenty of saber-rattling and posturing from the three countries. Through it all, a somewhat consistent pattern emerged: U.S. President Donald Trump kept threatening to withdraw from the pact while Canada and Mexico suggested they’d bring fresh thinking to the table to try to resolve some of the touchiest issues. The question now is whether they can move forward fast enough to salvage the deal before electoral politics overwhelm the agenda later this year.

“We’re reaching the danger zone right now,” said Stephen Moore, a visiting fellow at the Heritage Foundation who was an economic adviser to Trump during the 2016 campaign. “This is a pretty important meeting, because if there’s still no progress, the White House could become very frustrated and just throw up their hands and say, ‘We’re pulling out.”’



The latest session to revamp the North American Free Trade Agreement began Sunday in Montreal and is scheduled to last through Jan. 29, making it the longest round yet. Talks have continued despite the U.S. government shutdown that’s consumed Washington.

The 24-year-old trade pact is a linchpin for the U.S., Canada and Mexico, which trade more than $1 trillion in goods annually. Any of the three can quit after six-months’ notice, though Trump is the only one to regularly threaten to give it.

Trump has lately tied the talks to his push for a border wall with Mexico, while the U.S. is also growing impatient with Canada’s perceived unwillingness to compromise, according to two people familiar with the negotiations who spoke on the condition of anonymity.

At the same time, there are pro-Nafta signals coming from the Trump administration, including Agriculture Secretary Sonny Perdue who said in an interview last week that Trump shares his view that Nafta has benefits for U.S. farmers.

The Montreal round is likely to feature more substantial discussion on the five “poison pills” from the U.S., particularly autos, Brett House, deputy chief economist at Scotiabank, said in an interview, adding mounting pressure from Nafta supporters in the U.S. is a signal that Canada and Mexico’s strategy is working.

“Rather than the notion where we’re getting to some kind of point where Canada and Mexico are over a barrel and have to blink, I actually think we’re seeing the beginning of fruit from the approach they’ve both taken so far,” House said by phone. It’s “likely negotiations are going to go on well beyond the March deadline,” he said.

There are signs of possible progress. Mexico hinted it could bend on automotive rules, one of the most explosive issues, while also saying that officials agree broadly on 40 percent of the pact. Canada, meanwhile, has said it will bring “new ideas” to the talks, and that several topics, known as chapters, are close to being concluded, even as Canadian officials said the chance of a U.S. exit is seen as increasing.

There are a handful of key disputes over U.S. demands. They include autos, where the U.S. wants to raise the amount of a car that must be built in the three countries to be traded under the deal. Another hot button issue includes adding a sunset clause to terminate the pact after five years unless all three countries agree to renew it.

“It’s very important to continue to make progress both with the United States and with Canada,” Mexican Finance Secretary Jose Antonio Gonzalez Anaya said Jan. 18. “Mexico will not pay for a wall. It’s not a negotiation stance for Mexico; it’s an issue of national sovereignty and dignity.”

‘How Bad?’

Canada’s chief central banker said the ongoing talks are already hurting business investment and that it’s hard to predict the impact of the death of Nafta.

“I would believe that it would be net negative for both Canada and for the United States, but to actually quantify that is very difficult,” Governor Stephen Poloz told a news conference Jan. 17. Prices for consumers would rise and it would reverse the “income effect” that free trade deals create by boosting purchasing power, he said.

Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo will hold talks in Toronto on Monday. The two ministers along with U.S. Trade Representative Robert Lighthizer are scheduled to meet on the closing day of round six, while the seventh session of talks is set for February.

If the negotiations drag on too long, they could run into the political calendar. Mexico holds a presidential election July 1 and U.S. congressional midterms take place in November. Trump indicated this month that he could be flexible with talks ahead of the Mexican election -- and then repeated his threat to withdraw if he can’t reach an agreement that’s “fair” for America.

“The White House seems to have dug in its heels,” said Moore at Heritage, adding it’s possible, but not likely, Trump will lose patience and quit. “That would be a really bad outcome for the economy. I think it would send shudders through the stock market. It would create a lot of chaos.”

CETA

Global Affairs Canada. January 22, 2018. Minister of International Trade to meet key stakeholders along Canada's manufacturing corridor in southern Ontario

Ottawa, Ontario - Helping businesses succeed and making trade real for people are twin priorities for the Government of Canada. Canada’s progressive trade agenda helps Canadian businesses expand into new markets abroad, maximize competitive advantages and attract more foreign direct investment in communities across the country. This is how to create more jobs for the middle class and position more Canadians for success for years to come.

On January 23 and 24, 2018, the Honourable Francois-Philippe Champagne, Minister of International Trade, will participate in round-table conversations with representatives of Canadian businesses and manufacturers in Southern Ontario, emphasizing Canada’s support for the good middle-class jobs they create, along with their positive role in market diversification and investment attraction.

While in Southern Ontario, Minister Champagne will speak with members of Burlington’s business community, the Canadian Association of Mold Makers and the Oakville Chamber of Commerce. He will also visit the Ford Motor Company Windsor-Essex Engine Plant and Research Facility and will participate in a round table on trade hosted by Fred Eisenberger, Mayor of Hamilton.

Minister Champagne will meet with business and community leaders from Southern Ontario to discuss how small and medium-sized enterprises may benefit from the recently launched Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and highlight Canada’s support for communities seeking to attract the foreign direct investment crucial to job creation.

Quotes

“Canada’s focus on supporting Canadian companies in their market diversification is a priority in our efforts to create jobs, grow the economy and strengthen the middle class. From the new opportunities in the European market offered by the recent CETA agreement to the potential that exists in the Asia-Pacific and Latin America regions, there has never been a better time for Canada to diversify. Our government is committed to seizing the moment and to creating more opportunities for businesses to expand and diversify with confidence.”

- François-Philippe Champagne, Minister of International Trade

Quick Facts

• With the launch of CETA’s provisional application, on September 21, 2017, 98% of Canadian and EU tariff lines became duty-free, creating new opportunities on both sides of the Atlantic.
• In September 2017, the 10 economies that comprise the Association of Southeast Asian Nations (ASEAN) agreed to launch exploratory discussions to determine the potential for a Canada-ASEAN free trade agreement.
• Canada is engaged in exploratory discussions with China about a possible free trade agreement and has consulted Canadians on their views on this initiative.

CETA: Tariffs plummet to zero today as Canada-European Union deal gets under way: https://www.canada.ca/en/global-affairs/news/2017/09/ceta_tariffs_plummettozerotodayascanada-europeanuniondealgetsund.html
The Canadian Trade Commissioner Service: http://tradecommissioner.gc.ca/index.aspx?lang=eng

TPP

REUTERS. JANUARY 21, 2018. Trade officials pursue TPP in Tokyo as Canada wavers

TOKYO (Reuters) - Trade officials gathered in Japan on Monday for two days of talks to try to forge a trade pact that U.S. President Donald Trump abandoned last year, but the new 11-member club risks getting bogged down by resistance from Canada.

The member countries of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTTP), also known as TPP 11, reached a basic agreement on the pact in November.

But Canada is holding out to secure protection of its cultural industries, like movies, TV, and music, and has said it will not be rushed into signing a deal that other members hope to conclude by March.

That is casting a shadow over a meeting of trade officials from member countries this week in Tokyo and raises questions about the economic benefits of a pact that doesn’t bring Canada into the fold.


“There are still gaps,” between Canada and other members, Kazuhisa Shibuya, Japan’s senior TPP official, told reporters after the first day meetings, according to Kyodo news agency.

The economic impact of the TPP would be “significantly further eroded” if Canada postponed its decision to join, said Rajiv Biswas, Asia-Pacific chief economist at IHS Markit.

After Trump pulled the United States out of the agreement last year, Japan took a leading role in pushing for a replacement pact.

Along with Australia and Mexico, Tokyo has lobbied hard for the agreement, which aims to eliminate trading barriers and tariffs on industrial and farm products across the 11-nation bloc whose trade totaled $356 billion in 2016.

“Our strong preference is for all 11 countries to join the first wave, but our focus is on bringing a new TPP agreement into force as soon as possible with those who are ready to move,” Australian Prime Minister Malcolm Turnbull said in Tokyo last week.

The current talks in Tokyo are expected to iron out technical differences on rules for the treatment of labor and intellectual property but are unlikely to yield a conclusive statement that member countries will quickly sign the pact.

Canada, which would be the second-biggest economy in the bloc after Japan, is also unhappy over the rules of origin for cars.

“Like Vietnam, one of the crucial elements we secured was what is known as a work plan, a mechanism to deal with outstanding issues, which for Canada includes ensuring the deal provides better access and terms for autos and does not affect our unique cultural sensitivities,” Joseph Pickerill, spokesman for Canadian Trade Minister Francois-Philippe Champagne, said in a statement.

Vietnam has emerged as another swing country because of its resistance to rules that would improve rights for its workforce, although Hanoi hasn’t shown resistance to signing the pact.

“Canada has taken a step back to say they cannot sign TPP 11 right away, but there are expectations that if the remaining 10 countries move ahead, Canada will eventually come back,” said Junichi Sugawara, senior research officer at Mizuho Research Institute.

Reporting by Stanley White and Kaori Kaneko; Additional reporting by David Ljunggren in Ottawa; Editing by Shri Navaratnam and Nick Macfie

VENEZUELA

Global Affairs Canada. January 21, 2018. Foreign Affairs Minister to attend Lima Group meeting on Venezuela

Ottawa, Ontario - Canada has taken a leadership role in addressing the crisis in Venezuela and continues to work for the return of democracy for the people of Venezuela.

The Honourable Chrystia Freeland, Minister of Foreign Affairs, today announced that she will attend the fourth ministerial meeting of the Lima Group in Santiago, Chile, on January 23, 2018.

Since the last meeting of the Lima Group this past October, Venezuela’s economic situation has continued to deteriorate, and the suffering of the Venezuelan people has intensified. To achieve a lasting solution to this situation, it is crucial that the international community stand in solidarity with the Venezuelan people and oppose the Maduro regime’s continued dictatorial measures.

Canada remains committed to supporting the Venezuelan people as they struggle to restore their democracy, stand up for their human rights and bring an end to the worsening humanitarian crisis.

Quotes

“Canada is committed to the peaceful return to democracy in Venezuela. The Maduro regime is systematically violating the human rights and fundamental freedoms of its people. As members of the Lima Group, and as Canadians, we must do everything we can to restore constitutional order and relieve the unacceptable suffering of the Venezuelan people.”

- Hon. Chrystia Freeland, P.C., M.P., Minister of Foreign Affairs

Quick facts

• The Lima Group was established on August 8, 2017, to coordinate participating countries’ efforts and apply international pressure on Venezuela. Meetings of the group have been regularly attended by Argentina, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala, Guyana, Honduras, Jamaica, Mexico, Panama, Paraguay, Peru and Saint Lucia.
• Canada hosted the third ministerial meeting of the Lima Group in Toronto, Ontario, on October 26, 2017. The group discussed options to broaden cooperation with other international partners, maintain pressure on the Maduro regime and translate the group’s unwavering support for the Venezuelan people into further concrete actions. For Canada, this has involved two rounds of sanctions imposed on the Maduro regime.
• The Lima Group has committed to closely monitor events in Venezuela and apply pressure on Venezuela’s government until the full restoration of democracy in the country is achieved.

Canada hosts Lima Group meeting on Venezuela: https://www.canada.ca/en/global-affairs/news/2017/10/canada_to_host_limagroupmeetingonvenezuela0.html
Statement of the third meeting of the Lima Group on the situation in Venezuela: http://international.gc.ca/world-monde/international_relations-relations_internationales/latin_america-amerique_latine/2017-10-26-lima_group-groupe_lima.aspx?lang=eng
Canada imposes sanctions on Maduro regime in Venezuela: https://www.canada.ca/en/global-affairs/news/2017/09/canada_imposes_sanctionsonmaduroregimeinvenezuela.html
Canada imposes sanctions on individuals linked to human rights violations and corruption: https://www.canada.ca/en/global-affairs/news/2017/11/canada_imposes_sanctionsonindividualslinkedtohumanrightsviolatio.html

Canada and the Venezuela crisis: http://www.international.gc.ca/world-monde/issues_development-enjeux_developpement/response_conflict-reponse_conflits/crisis-crises/venezuela.aspx?lang=eng&_ga=2.44271652.1401135122.1516226456-1431925758.1505849081

THE GLOBE AND MAIL. JANUARY 22, 2018. OPINION. In Venezuela, heaven has become hell
ALEXANDER DUARTE, CONTRIBUTED TO THE GLOBE AND MAIL. Alexander Duarte and his family are now refugees in Toronto. He and his wife are members of the Pen Writers in Exile Supper Club. This column has been translated by Canadian-Mexican author Martha Bátiz.

Venezuela owns the world's biggest oil reserves and is rich in minerals such as gold, iron and diamonds but its population is going hungry from lack of food and medicine.

After ascending to power in January, 1999, Hugo Chavez and his regime benefited from an increase in oil prices. With billions of dollars at its disposal, Venezuela gave away oil to countries which, in turn, became its allies within international organizations.

In April, 2002, after a failed coup, the regime launched the persecution of journalists and the opposition. At the same time, it established very restrictive money exchange controls, expropriated farm lands as well as food-producing companies, and withdrew mining and oil concessions.

But the regime was not capable of producing enough food and started to import it through the state-owned Petroleos de Venezuela. This move opened the doors for senior officials to become private entrepreneurs, carrying out the biggest embezzlement Venezuela had ever seen.

The exchange rate is officially set at 10 bolivares per dollar, but this applies to imports only. The dominant cycle of corruption consists of making dollars available at this price only to those who are close to the regime. They, in return, buy merchandise abroad, which is then sold at the price set by a parallel exchange rate where, right now, one dollar is equivalent to 178.547 bolivares. The minimum wage is insufficient to cover the food expenses of Venezuelan families. At the end of last year, President Nicolas Maduro announced the sixth increase to the minimum wage in that year alone – which, in real terms, is barely five dollars per month.

After the fall in oil prices, the government does not have enough resources to import food any longer. The so-called food-sovereignty translates into hunger, malnutrition, repeated looting of supermarkets and food-transporting trucks, farmhouse robbery, and livestock theft.

The government hopes to combat inflation through strict price control. With the support of the National Guard, it polices supermarkets and forces managers to drastically reduce prices. Some managers are even deprived of their liberty, accused of promoting an "economic war"– a term that the government uses to justify its inability to stop the increase of the inflation rate, which, in 2017, reached 2,616 per cent.

President Maduro has created the "Homeland ID." Those who have it have access, once a month, to insignificant bags of food. People are starving.

In July, 2017, Mr. Maduro created the National Constituent Assembly, which granted itself legislative authority. On Aug. 5, 2017, its first action was to dismiss Attorney-General Luisa Ortega Diaz, who, four months before, had denounced to the world the breach of constitutional order in Venezuela. The Constituent Assembly granted itself judicial authority, ordering to have the Attorney-General and her husband, representative German Ferrer, arrested. They were forced to flee on a tiny boat to Aruba. Ms. Ortega Diaz, who was once close to President Chavez, has experienced herself the tragedy of dozens of politically persecuted Venezuelans.

My wife and I, together with our children, were also forced to flee. We were accused of collaborating with the Attorney-General in the dissemination of documents that prove the government's fraud in designating 33 magistrates for the Supreme Court, many of them involved in various crimes. Journalists are accused of being traitors: More than 376 were attacked in 2017 by security agencies; fourteen of them were arrested and cruelly mistreated. On May 10, during a protest, journalist Miguel Castillo was killed.

The denunciations of corruption made by Ms. Ortega Diaz generated numerous demonstrations against the government, during which 157 people were killed and more than 2,000 wounded by the National Guard. Three thousand were arrested. Through the Constituent Assembly, Mr. Maduro's government passed the Anti-Hate Law, which allows citizens to be arrested merely for expressing their dissatisfaction.

The government claims that nothing is wrong in Venezuela but the political upheaval is at its highest. It's not only middle-class students who are protesting on the streets when hunger is a fact for many.

How can my wife and I explain to our children why they had to abandon their country, to leave their friends behind and become forced foreigners, exiled and banished, only because their parents were persecuted for telling the truth?

INTERNATIONAL TRADE

Canadian International Trade Tribunal. January 19, 2018. Tribunal Initiates Expiry Review—Seamless Carbon or Alloy Steel Oil and Gas Well Casing from China 

Ottawa, Ontario — The Canadian International Trade Tribunal today initiated an expiry review of its order made on March 11, 2013, in Expiry Review No. RR-2012-002, to determine if the continued or resumed dumping and subsidizing of seamless carbon or alloy steel oil and gas well casing from the People’s Republic of China are likely to result in injury.

On June 18, 2018, the Canada Border Services Agency will determine if there is a likelihood of resumed or continued dumping and subsidizing. In the event of a positive determination, the Tribunal will determine, on November 26, 2018, whether the continued or resumed dumping and subsidizing are likely to result in injury.

The Tribunal is an independent quasi-judicial body that reports to Parliament through the Minister of Finance. It hears cases on dumped and subsidized imports, safeguard complaints, complaints about federal government procurement and appeals of customs and excise tax rulings. When requested by the federal government, the Tribunal also provides advice on other economic, trade and tariff matters.

Any interested person, association or government that wishes to participate in the Tribunal’s expiry review may do so by filing a Notice of Participation with the Tribunal on or before July 3, 2018.

Canadian International Trade Tribunal—Newly Published Documents: http://www.citt-tcce.gc.ca/en/whats-new

WHOLESALE

StatCan. 2018-01-22. Wholesale trade, November 2017

• Wholesale sales — Canada: $63.6 billion, November 2017, 0.7% increase (monthly change)
• Source(s): CANSIM table 081-0011: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=0810011&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=

Wholesale sales rose 0.7% to $63.6 billion in November, a second consecutive increase. Sales were up in six of seven subsectors, representing 99% of wholesale sales. The food, beverage and tobacco subsector and the motor vehicle and parts subsector led the gains.

In volume terms, wholesale sales increased 0.5%.

Chart 1: Wholesale sales increase in November

The food, beverage and tobacco subsector leads the gains

The food, beverage and tobacco subsector posted the largest increase in dollar terms in November, rising 1.9% to $12.2 billion. Higher sales in the food industry, up 2.2% to $11.1 billion, contributed the most to the gain. This was the highest level on record for both the subsector and the industry.

The motor vehicle and parts subsector rose 0.7% to $12.0 billion, its fourth increase in five months. The gain was attributable to higher sales in the new motor vehicle parts and accessories industry, up 2.4% to $2.3 billion. This was the highest level for this industry since September 2015. Manufacturing sales of motor vehicles, as well as imports and exports of motor vehicles and parts, also increased in November.

Sales in the building material and supplies subsector rose 0.6% to $9.0 billion, its third consecutive increase. Sales in the metal service centres industry rose 5.6% to $1.8 billion—its highest level since July 2008.

Ontario posts the largest increase

Sales in Ontario rose 1.7% to $32.9 billion in November. Sales were up in three of seven subsectors, led by the building material and supplies subsector (+8.0%). Sales in this subsector rose for the second time in three months, up 9.3% over the period. The second largest contributor was the food, beverage and tobacco subsector (+3.7%), its first increase in four months. The machinery, equipment and supplies subsector (+2.2%) rose for the third consecutive month.

Sales in Quebec and British Columbia were both down in November, primarily on lower sales in the building material and supplies subsector. Sales in Quebec decreased 0.5% to $11.5 billion, the second decrease in three months, but were up 12.6% year over year. Sales in British Columbia decreased 0.7% to $6.4 billion—the third decline in four months.

Saskatchewan (-1.6%) and Manitoba (-1.4%) also reported lower sales in November, with the miscellaneous subsector leading the decline. This was the third decline in four months for both provinces, with Saskatchewan down 2.9% and Manitoba up 1.3% over the four-month period.

Wholesale inventories decline for the first time in eight months

Wholesale inventories were down 1.2% to $81.1 billion in November, the first decline in eight months. Three of the seven subsectors were down, representing 60% of total wholesale inventories.

Chart 2: Inventories decline in November

Inventories in the machinery, equipment and supplies subsector decreased 3.3% in November, accounting for the largest drop in dollar terms of all subsectors. The majority of the decline was driven by the other machinery (-9.3%) and the farm, lawn and garden (-6.4%) industries.

The motor vehicle and parts subsector (-4.0%) posted a second consecutive monthly decline. Lower inventory levels in the motor vehicle industry (-5.5%) contributed the most to the drop.

Inventories fell by 2.2% in the personal and household goods subsector, with declines in four of six industries.

The inventory-to-sales ratio decreased from 1.30 in October to 1.28 in November. This ratio is a measure of the time in months required to exhaust inventories if sales were to remain at their current level.

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/180122/dq180122a-eng.pdf

REUTERS. JANUARY 22, 2018. Canada wholesale trade up in November on broad-based strength

OTTAWA (Reuters) - The value of Canadian wholesale trade rose for the second month in a row in November on broad gains across sectors, including the food and vehicle industries, data from Statistics Canada showed on Monday.

The 0.7 percent increase was shy of economists’ forecasts for a 1 percent gain, while volumes rose 0.5 percent. October’s sales were revised slightly higher to 1.6 percent from the initially reported 1.5 percent.

Wholesale trade rose in six out of seven sectors in November, accounting for 99 percent of sales and led by a 1.9 percent increase in the food, beverage and tobacco industry.

The motor vehicle sector rose for the fourth time in five months, up 0.7 percent, on higher sales of new vehicle parts and accessories. Canadian auto sales topped the 2 million mark last year for the first time as consumers bought light trucks.

Inventories fell 1.2 percent, the first decline in eight months amid decreases in the machinery and equipment, and vehicle sectors.

Overall, the report boded well for overall economic growth in November after a strong year that prompted the Bank of Canada to begin raising interest rates.

Reporting by Leah SchnurrEditing by Chizu Nomiyama

________________

LGCJ.: