CANADA ECONOMICS
NAFTA
The Globe and Mail. 12 Jan 2018. Canada aims to break through NAFTA auto roadblock
ADRIAN MORROW, WASHINGTON
GREG KEENAN, TORONTO
BILL CURRY, LONDON, ONT.
The auto and dispute-settlement propositions are likely to be put on the table at the next round of talks, slated to start Jan. 23 in Montreal.
Ottawa is drafting proposal that would boost amount of North American-made content, as well as considering new dispute-settlement provisions to placate U.S.
Canada is working on a proposal to boost the amount of North American-made content in cars and trucks manufactured in the NAFTA zone, sources say, in a bid to break the deadlock over one of the most contentious subjects in the trade deal’s renegotiation.
Ottawa is also crafting a series of potential compromises on the North American free-trade agreement’s dispute-resolution provisions, another major sticking point in the talks between Canada, the United States and Mexico. But even as Canada offers President Donald Trump an olive branch, it is serving notice that it will not be pushed around: Trade Minister François-Philippe Champagne said a World Trade Organization case made public earlier this week was about winning the United States’ “respect” by firing a shot across its bow. In the case, Ottawa accuses Washington of breaking international trade rules with the punitive duties it has slapped on Canadian softwood lumber as well as a host of products from other countries.
“When you stand strong in sending a message that says we will stand up for our forestry industry, we’ll stand up for our aerospace industry, we’ll stand up for Canadian workers, you get respect,” Mr. Champagne said Thursday at a cabinet retreat in London, Ont. “When people see that you’re firm, you get respect. And I think that the message that has been sent [Wednesday] is one of firmness.”
The prospective NAFTA proposals, according to sources with knowledge of the discussions, are aimed at salvaging the acrimonious negotiations by offering the Trump administration compromises to back off its tough protectionist demands. The sources spoke on condition of anonymity to describe confidential discussions of proposals that have not yet been tabled.
The auto and dispute-settlement propositions are likely to be put on the table at the next round of talks, slated to start Jan. 23 in Montreal. Mexico has also been working on an auto compromise since at least last fall.
Canada has so far flatly rejected all of the United States’ most nationalistic demands. Mr. Trump has proposed forcing all Canadian and Mexican vehicles exported to the United States to contain at least 50 per cent U.S. content or pay punitive duties, abolishing or gutting NAFTA’s dispute-settlement mechanisms and capping the amount of U.S. procurement Canadian and Mexican companies can bid on.
But now, Ottawa will seek common ground. “We’ve been talking with Canadian stakeholders and we have some new ideas that we look forward to talking with our U.S. and Mexican counterparts about in Montreal,” Foreign Affairs Minister Chrystia Freeland said Thursday.
The draft auto proposal would see changes made to the formula for calculating the North American content of vehicles. Currently, vehicles made in the NAFTA zone must contain 62.5 per cent North American content to be shipped between the three countries without paying duties. But that content requirement only applies to some components, codified on what is called the “tracing list.” Canada is considering proposing that the content requirement instead be calculated on the total value of the vehicle, which would ensure that some things currently not covered – such as the development of software that runs the computer systems in vehicles – is included in the total, said sources familiar with the draft proposals.
Another possibility, one source said, is to exclude from the calculation components that are commodities, such as brakes, wheels and windows, but include spending related to research and development and software. Such an approach would capture content that is more crucial as technology related to self-driving vehicles becomes more important.
Yet, another option under consideration is to adopt the content formula that was negotiated for autos in the Trans-Pacific Partnership. Under such a system, content from outside North America could be considered North American content if it undergoes “substantial transformation” in a NAFTA country. For instance, an auto part made from steel imported from outside North America that is stamped, forged, or formed into parts could qualify as North American content if this sort of proposal were adopted, said one source.
As The Globe and Mail revealed in November, Mexico has been working on an auto counterproposal that would offer to significantly tighten the rules on North American content in vehicles in exchange for Mr. Trump dropping the U.S. content requirement.
Flavio Volpe, president of the Automotive Parts Manufacturers’ Association of Canada, said whatever ideas Canadian officials intend to raise in Montreal should remain confidential. “You don’t really play poker with your cards up,” Mr. Volpe said.
And he cautioned that sorting out the automotive chapters of a new NAFTA agreement will be laborious.
“I think it would be naive for any of us to think we’re going to walk out of Montreal with an auto solution,” he said.
One source said Canada is also mulling various ideas on NAFTA’s disputesettlement provisions – chapters 11, 19 and 20 – but has not decided what exactly to propose. Canada is adamant about keeping in Chapter 19, in which NAFTA tribunals can overrule punitive anti-dumping duties. The United States wants to delete Chapter 19 entirely; allow countries to opt out of Chapter 11, which permits companies to sue governments for hurting their business; and allow countries to disregard the decisions of Chapter 20 panels, which adjudicate disputes between governments.
Mr. Trump on Thursday offered an olive branch of his own. In an interview with the Wall Street Journal, he hinted that he would extend negotiations beyond their current March timeline to after the Mexican presidential election in July, saying he was “leaving it a little bit flexible.” In that vote, the governing Institutional Revolutionary Party faces an uphill battle against, among others, leftist firebrand Andres Manuel Lopez Obrador.
“I understand that a lot of things are hard to negotiate prior to an election,” the paper quoted Mr. Trump as saying. “They have an election coming up fairly shortly. I understand that makes it a little bit difficult for them.”
He also told the Wall Street Journal that Mexico would pay for his promised wall along its border with the United States through NAFTA. Mr. Trump did not appear to specify how such an arrangement would work.
“We make a good deal on NAFTA, and, say, ‘I’m going to take a small percentage of that money and it’s going toward the wall,’ ” he said. “Guess what? Mexico’s paying.”
The Globe and Mail. 12 Jan 2018. Campbell Clark: It’s white-knuckle time now
CAMPBELL CLARK, Columnist
It’s white-knuckle time now. The prospects for NAFTA talks have looked dim for months, but suddenly, nerves are on edge.
The loonie and the Mexican peso fell on Wednesday. So did stocks in companies such as General Motors that rely on crossborder value chains throughout North America. Stock markets were spooked a little, if only for a day. It was triggered by the combination of market chatter and a headline that blared that Canadian officials were increasingly sure U.S. President Donald Trump plans to pull the plug on the North American free-trade agreement (NAFTA). But Canadian officials have been downright pessimistic for months – in private, that is – and insist they have no new knowledge about Mr. Trump’s intentions now.
And then there was a separate Canadian counterpunch at the World Trade Organization, centred on softwood lumber, which suggested a more bare-fisted approach to trade with the United States.
This is the week that concerns over Mr. Trump’s trade agenda morphed into NAFTA-danger syndrome, when people started to notice the risk and big-money bets were won and lost in the market.
You can bet Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland, at a cabinet retreat in London, Ont., are fielding calls and messages from worried business leaders. They are entering the steel-testing period of the talks to renegotiate NAFTA, when the fear will become palpable. Ms. Freeland could not really kill it off, either. Sure, she said she hopes it works out, but Canada is ready should Mr. Trump initiate a withdrawal.
How will Mr. Trudeau and his Liberal government react? Will they hold to a tough line, or scramble to give the United States some concession to make a deal? The worry and pessimism inside the Canadian government is not new. Senior officials in Ottawa knew that last April when Mr. Trump flirted, cavalierly, with triggering a withdrawal from NAFTA. But gloom has been growing around the talks since the United States started putting so-called “poison pill” proposals on the table in the third round, in Ottawa last September.
But the Canadian government has not had any new indication now that Mr. Trump is ready to start the withdrawal process, a senior official said, other than what he and U.S. officials have said in public; Ms. Freeland was in Washington on Tuesday meeting U.S. Commerce Secretary Wilbur Ross, but he did not reveal Mr. Trump’s intentions.
What has changed now is timing. For months, the United States has not backed away from key demands that neither Canada nor Mexico can accept. Ms. Freeland and her counterparts, U.S. Trade Representative Robert Lighthizer and Mexican Secretary of the Economy Ildefonso Guajardo, had set a “notional” deadline of March 31 to complete the talks – because of a Mexican presidential election campaign and U.S. congressional primaries. The sixth round of NAFTA talks opens later this month in Montreal. That, they reasoned, could be crunch time.
Because of that timing, the Canadian government is on heightened alert for the possibility Mr. Trump could trigger a withdrawal, a senior official said. But they don’t know.
The headline on the Reuters story that ran on Wednesday was far more categorical. And the jitters hit the markets.
Some think the markets are slow to realize the risk.
“NAFTA is in the toilet,” said Jerry Dias, the national president of Unifor, the country’s largest private-sector union, and a NAFTA critic. “The only way it’s going to survive is if somebody completely capitulates. And that’s not going to happen in the short term.”
But if Mr. Trump actually does have a serious renegotiation strategy, it was always going to come to this kind of nervous drama for Mr. Trudeau’s government. Mr. Trump’s deal-making has famously involved over-the-top initial demands and relentless pressure. He is not known for giving back gains to those who give in, either.
And there is some sign of counter-momentum in the United States, according to Dan Ujczo, a lawyer with cross-border law firm Dickinson Wright.
Mr. Trump attended a meeting of the American Farm Bureau last week, and responded to farmers’ concerns that they will lose their exports to Mexico and Canada by eschewing his usual tough talk on NAFTA. Farm-belt senators have been talking to the White House. That might “put a bit of hesitation in Mr. Trump’s trigger finger,” Mr. Ujczo said. A NAFTA withdrawal hitting commodity prices or stock prices is language Mr. Trump understands. And most Republicans in Congress simply want to punt the issue until after the 2018 elections. If there’s a bit of progress in Montreal, Mr. Trump might be willing to delay – but continue to talk tough. Ms. Freeland insisted Canada will stand up for its interests, but has some “creative” proposals to put on the table later this month. And Mr. Trudeau’s government faces the challenge of holding on while the jitters rise.
The Globe and Mail. 12 Jan 2018. The post-NAFTA world is starting to take shape
LAWRENCE HERMAN
Canada’s move to take the United States to the World Trade Organization … is a clear signal that the NAFTA exercise is up against the wall and that the United States is preparing to trigger the six-month withdrawal notice.
Are we entering the postNAFTA world? It certainly looks that way. The markets finally woke up to this on Wednesday, after sleepwalking for the past year, as bond yields and stock prices sank and the dollar took a hit on news that the Trump administration is preparing to pull the plug on the North American free-trade Agreement, maybe even before the next round of negotiations slated for Montreal at the end of the month.
Markets have a way of ignoring facts, or at least taking a rosy view in complex situations of government-to-government trade policy. In this case, the somnambulism was based on misplaced optimism that trade negotiators would be able to solve the NAFTA problems, blithely ignoring the significance of U.S. President Donald Trump’s repeated declarations that the agreement was the worst deal in history and constantly threatening to walk out unless the United States got what it wanted in the renegotiating process.
Canada’s move to take the United States to the World Trade Organization (WTO) over its abuses of globally agreed rules, made public on Wednesday, is a clear signal that the NAFTA exercise is up against the wall and that the United States is preparing to trigger the six-month withdrawal notice. It’s an indication that Plan B is now operative, as The Globe and Mail’s Barrie McKenna rightly observed.
Taking the United States to the WTO diverts the matter from NAFTA turf, where the Americans hold most of the cards, and moves it to an international forum where all parties are equal and where judgments over whether the rules are being followed will be determined by a neutral panel.
It’s what the multilateral system was designed to do – level the playing field, removing the case from a stacked negotiating forum where a powerful bully dominates and relying on the WTO’s judicial body to dispassionately review one member’s complaint against another.
Canada has outlined a whole litany of U.S. “nullification and impairment” measures affecting Canadian trade extending over decades, including the U.S. refusal to fully implement WTO panel rulings, saying that those decisions only cover past importations and only those particular products, leaving the impugned measure in force for future cases.
By bringing its WTO case now, the Trudeau government recognizes that NAFTA can’t be repaired and that U.S. trade actions will only escalate with full encouragement under Mr. Trump’s protectionist America First agenda. Canada is showing that it has offensive as well as defensive strategies.
There are risks here and the first will be the inevitable souring of our bilateral trade relations. As Andrei Sulzenko has written in this space, trade remedies are viewed by Americans as the commercial equivalent of the constitutional right to bear arms, meaning there will be a highly charged and aggressive counterattack by the Trump administration.
This has already begun, with Robert Lighthizer, the U.S. Trade Representative, slamming Canada’s WTO request as a “broad and ill-advised attack on the U.S. trade remedies system.”
The Trudeau team needs to be steely eyed in weathering these assaults. Whatever vitriol might light up Twitter accounts, the Canadian complaint is totally within WTO rules and the right of any member to seek redress where another member nullifies or impairs its benefits under the WTO agreement.
This will be Canada’s biggest ever WTO case, an epic battle taking years to get resolved. In the meantime, Canadian business needs to adjust to a likely post-NAFTA world. Even the earlier 1988 bilateral CanadaU.S. free-trade agreement (FTA), which remains in force in the background, could be in Mr. Trump’s crosshairs. Terminating U.S. participation in these treaties will mean ending current and future binational panel reviews, including softwood lumber, all which will be diverted to the U.S. domestic court system.
On the less negative side, a world without a Canada-U.S. trade agreement won’t stop continuing trade or business between our two countries. Japan, the EU, China and indeed most of the world do business with the United States without bilateral trade agreements. There will be an adjustment period but in the end Canadian trade will recover.
The longer-term spillover impact on the bilateral relationship in a post-NAFTA world is difficult to assess. Luckily, that relationship is robust enough to weather strains and irritants and has shown itself to be surprisingly resilient in spite of political and economic disputes in particular areas, some of which have been pretty contentious.
The problem until all of this jells will be continuing market uncertainty, compounded by the battle shaping up in Washington over whether Mr. Trump can legally withdraw from NAFTA without congressional approval. The debate over the role of Congress will be further complicated by the impending U.S. midterm elections as well as constitutional litigation over the respective roles of the White House and Congress regarding abrogation of trade agreements.
So, while there’s a lot of drama surrounding Canada’s WTO case and all of its strategic implications, the centrepiece in all of this is NAFTA and the critical events unfolding over the next few weeks. We’re in for uncertain times in a post-NAFTA world.
REUTERS. JANUARY 11, 2018. Canadian companies struggle to plan for post-NAFTA world
Alastair Sharp
TORONTO (Reuters) - Canadian industries that would be most acutely impacted by the death of the North American Free Trade Agreement are unable to meaningfully plan for a possible post-NAFTA world given the uncertainty of what could replace it, analysts and executives said.
With three quarters of Canadian exports landing in the United States, the terms of that trade are key to Canadian industries ranging from automotives to agriculture, energy and aluminum, as well as the railways and pipelines transporting their goods.
Yet if the United States does decide to walk away from the trade deal that tightly links the U.S., Canadian and Mexican economies, a scenario seen as increasingly likely, it is unclear what tariffs might apply to which exports, and what timeline might apply.
“The problem with it is, even if they pull out of NAFTA what comes next and that’s unclear,” said David Tyerman, a transportation and industrials analyst at Cormark Securities. “So you are hitting at a straw man that is not defined at all.”
Without NAFTA, the terms of trade could default back to a bilateral agreement which NAFTA replaced or to World Trade Organization rules, or could be created afresh.
The lack of clarity means that auto part companies such as Magna International Inc, Linamar Corp and Martinrea International Inc have little choice but to focus on delivering existing commitments and winning new contracts, Tyerman said.
“It’s almost like it’s business as usual,” he said. “The parts companies are continuing to win business from the auto makers.”
Aluminum producers in Canada, the world’s biggest supplier to the United States, worry about “collateral damage” from changes that could pinch the flow of Canadian exports, said Jean Simard, CEO of the Aluminum Association of Canada, who said the current system “works beautifully”.
Railway operators may also face lower volumes in the aftermath of a NAFTA breakup, but also need a better sense of how any new rules will affect their customers’ decisions.
“In a worse-case scenario with double-digit tariffs you will still only see incremental change in traffic patterns”, said Rick Paterson, an analyst at Loop Capital Markets who covers companies including Canadian National Railway Co and Canadian Pacific Railway Ltd.
An end to NAFTA would not immediately hurt Canadian grain exporters, since any new tariffs would require Congressional approval. But it could sting exporters and farmers longer term since the United States is Canada’s biggest wheat, hog and cattle export market.
The country’s energy industry does not expect tariffs to be imposed on oil and gas exports, said Nick Schultz of the Canadian Association of Petroleum Producers, given that would amount to an additional cost to U.S. refiners, which import 3 million barrels a day of Canadian crude.
Reporting by Alastair Sharp, Susan Taylor and Fergal Smith in Toronto, and Nia Williams and Rod Nickel in Calgary; Editing by Sandra Maler
THE GLOBE AND MAIL. JANUARY 12, 2018. ‘No rush’: Trump softens stand on NAFTA, says he prefers deal to termination
ADRIAN MORROW, WASHINGTON
BILL CURRY, OTTAWA
U.S. President Donald Trump says the renegotiation of the North American free-trade agreement is "moving along nicely" and he hopes that a deal can be struck, a new stand welcomed by Canada's Foreign Affairs Minister Chrystia Freeland.
This surprisingly positive assessment by the U.S. President, in a wide-ranging interview with The Wall Street Journal Thursday, is a sharp contrast with the U.S.'s usual rhetoric on NAFTA talks, which tends to stress that the discussions are deadlocked because Canada and Mexico refuse to agree to Washington's demands.
Mr. Trump told The Wall Street Journal he still planned to "terminate" NAFTA if a deal can't be reached, but he'd rather it did not come to that.
"I would rather be able to negotiate. We've made a lot of headway. We're moving along nicely," the President was quoted as saying. "[United States Trade Representative] Bob Lighthizer and others are working very hard, and we'll see what happens."
The encouraging signals from Mr. Trump come ahead of the sixth session of talks, scheduled to start Jan. 23 in Montreal.
The President said he understood it was hard for Mexico to negotiate with its presidential election looming on July 1. The governing Institutional Revolutionary Party is under intense domestic pressure not to be seen as buckling to the United States, and faces an uphill battle to hold on to power. "I'm leaving it a little flexible because they have an election coming up. So I understand a lot of things are hard to negotiate prior to an election," he said. "There's no rush."
Ms. Freeland welcomed Mr. Trump's suggestion that NAFTA talks should not be rushed in light of the Mexican election.
One day after warning Canadians of the real possibility that the U.S. could suddenly move to withdraw from the North American free-trade agreement, Ms. Freeland embraced Mr. Trump's new suggestion of patience.
"I thought that was a sensible suggestion from the President. I think all of us are mindful of the Mexican elections, and certainly as far as Canada is concerned, we have approached these negotiations with goodwill. We've done our homework. We are working extremely hard. But for us, we've always felt that imposing artificial deadlines was not necessary from the Canadian standpoint," Ms. Freeland told reporters Friday at a cabinet retreat in London, Ont.
The Mexican election had previously been viewed as a form of unofficial deadline for the NAFTA negotiations. When the talks began, suggestions had also been made that a final deal could be reached before the end of 2017.
Both Canada and Mexico are working on compromises meant to break the bargaining table logjam on the most contentious matters. Sources with knowledge of the discussions have told The Globe and Mail that Canada and Mexico are both looking at ways to jack up the amount of North American content – particularly software and other computer equipment – in autos made in the NAFTA zone, in a bid to convince the Trump administration to drop its demand that all vehicles made in Canada and Mexico contain 50 per cent U.S. content or face import duties.
Canada is also mulling changes to NAFTA's various dispute-resolution mechanisms to get the U.S. to back off demands that these mechanisms be abolished or gutted.
Ottawa has for months been bracing for Mr. Trump to trigger Article 2205, the NAFTA withdrawal process, and sources said this week Canada is prepared for him to make such a move at any time.
But in his Wall Street Journal comments, Mr. Trump instead held out the possibility that talks could extend well past the current deadline of March and into the summer.
Asked if he had a timetable for deciding whether to terminate NAFTA, Mr. Trump replied: "No."
Despite his newly softened stance on a NAFTA timeline, Mr. Trump repeated his assertions that the U.S. might be just fine without NAFTA and said it would be "a positive" if he killed the deal.
Asked about a hit to the stock market earlier this week after a Reuters story cited two unnamed Canadian officials speculating a U.S. withdrawal from NAFTA was imminent, Mr. Trump asserted an actual withdrawal would not be bad for markets. "I can tell you I'm not sure about world markets, but I can tell you I think the American market would go up if I terminated NAFTA and renegotiated a new deal," Mr. Trump said.
He also repeated one of his usual falsehoods, that the U.S. has a $17-billion trade deficit with Canada. In fact, the U.S.'s own calculations show it had a $12.5-billion surplus in 2016, the most recent year for which numbers are available.
Mr. Trump also slammed Mexico for attracting auto plants away from the United States.
"How about all the plants that have been taken out of this country and moved to Mexico? Like taking candy from a baby. No, I won't let that happen," he said.
"Mexico may not want to make the NAFTA deal and which is okay, then I'll terminate NAFTA … which I think would be frankly a positive for our country. I don't think it's a positive for Mexico, I don't think it's a positive for the world. But it's a positive for our country because I'll terminate NAFTA and make a new deal."
And he suggested he would somehow take "a small percentage of … money" from NAFTA to pay for a wall along the U.S. border with Mexico, but did not specify how exactly such a scheme would work.
Mexico's chief NAFTA negotiator, Kenneth Smith Ramos, took to Twitter to torpedo the idea. "Let this be clear: the issue of the payment for a #border #wall is not, and will never be, part of the #NAFTA #negotiations #wearenotjoking," he wrote.
The Globe and Mail. 12 Jan 2018. EDITORIAL. With WTO move, Canada gets clever
There’s something almost comically brash about the trade complaint Canada has launched against the United States. In cartoon form, it’s Dudley Do-Right firing a pistol at Mount Rushmore.
The charge sheet we’ve delivered to the World Trade Organization lists nearly 200 cases stretching back some 20 years and includes trade disputes involving dozens of other countries. The American trade czar has called it “ill-advised” – in roughly the way a mob boss calls incursions on his turf illadvised, before sending a few dead fish in the mail.
So just what is Canada up to? Why are we strafing the United States on the world stage with NAFTA talks due to resume later this month?
A few possibilities present themselves, all of them related, and all of them likely at play.
The complaint centres on how and why the Americans retaliate to alleged “dumping” – the export of subsidized products at artificially low prices. The simplest explanation, then, is that we’re punching back against tariffs the United States has slapped on softwood lumber, newsprint and Bombardier jets in the last few months.
But the move also comes amidst rumblings that Canada thinks the United States will soon announce its intention to pull out of NAFTA. This may very well be a stab at showing the United States how irritating a world without continental free trade could be, and at showing a domestic audience that for all the Trudeau government’s courtship of the Trump administration, it is willing to play hardball if needed.
That’s already two or three rationales nested in one another, and there may be something else at work, too – something more idealistic and risky than mere trade pugilism.
Given how wide-ranging the complaint is, Canada seems to be auditioning for a role as defender of the rules-based global trade regime writ large.
It won’t be news to anyone that the current order needs defending, what with a proud protectionist in the White House. But what has not been widely reported is the degree to which the United States has been trying to discredit and hobble the WTO. In particular, the United States has used its powers to leave vacancies on the WTO appeals court unfilled, threatening the organization’s ability to hear disputes.
Foreign Affairs Minister Chrystia Freeland has been a vocal defender of the rules-based international order that the WTO represents, rightly arguing that it has undergirded 70 years of peace and prosperity in the West, and has especially benefited middle powers like Canada. Calling the U.S. to account for flouting WTO rules fits into that intellectual framework.
This is speculative, by definition. The strategies behind trade disputes can’t be fully explained to the public; that would mean showing one’s hand. But each of the goals Canada seems to have in mind with this complaint makes sense in isolation.
Ottawa has been complaining about U.S. anti-dumping policies for ages, and Canada has taken a bruising lately, so fighting back on that is sound.
So is getting feistier with the United States on NAFTA. Team Trudeau’s charm offensive – taking Ivanka Trump to a Broadway show and so on – seems to have failed. In Team Trump, we are dealing with hardened nationalist ideologues who are convinced free trade and the WTO are harming the United States. Making them like us won’t work; showing them they have something to lose might.
Meanwhile, reaffirming the clout of the WTO and what it represents as the Trump administration huddles behind its America First palisades is a noble undertaking.
But a policy that tries to do too many things can end up doing none of them. Imagine, for example, if the administration retaliates by redoubling its fight against alleged Canadian dumping, calls for an end to NAFTA in a fit of Trumpian pique, and sours further on the WTO, now that even a friend and neighbour is using it as a cudgel.
Those outcomes would be bad for the United States, but we can’t count on a rational cost-benefit analysis from the Trump administration. And the fact remains that any of those outcomes would be even worse for Canada. That’s the problem with elaborate gamesmanship with the United States: We need them more than they need us.
None of this means we should be timid in the face of Mr. Trump’s erratic, bullying style. But optics aside, the trouble with the WTO complaint may not be that it’s too brash, but that it’s too clever by half.
The Globe and Mail. 12 Jan 2018. OPINION. Trade secrets damage credibility of NAFTA negotiations. Ottawa has been less than forthcoming about the creation of hush-hush industry advisory groups, and this two-tier approach creates an uneven playing field
MICHAEL GEIST, holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa, Faculty of Law
The willingness to disclose NAFTA negotiating details should not come as a surprise as the government undoubtedly wants to limit the possibility of unanticipated harms from the final text. Yet the entire process remains shrouded in secrecy.
While the openness to public comment represents a notable shift in approach, the government has been far less forthcoming about the creation of secret NAFTA industry advisory groups. According to documents obtained under the Access to Information Act, as of last October, members of those groups had signed 116 confidentiality and non-disclosure agreements (NDAs) that pave the way for access to secret information about the status of the negotiations. Those stakeholders are in addition to the dozen NAFTA Advisory Council members, most of whom have also signed the non-disclosure documents.
The industry advisory groups cover some of the negotiations’ most contentious areas, including agriculture, intellectual property, services, auto, culture and energy. There are also groups for newer trade issues such as women’s rights, labour and Indigenous concerns. In all, the government supports at least 12 previously undisclosed advisory groups.
The size of each advisory group varies: The government documents indicate there are at least 14 members in the services group, 12 members in the auto group and seven in the intellectual-property group. The composition of the advisory groups remains a secret, though officials acknowledge that they consist primarily of businesses and their industry associations with few independent voices and no academic experts.
Officials maintain the NDAs are needed to allow for disclosure of the state of the talks and the negotiating positions of the U.S. and Mexico delegations. While revealing Canadian positions would not be subject to confidentiality restrictions, an agreement between the three countries allows for private disclosure of the dynamics of the negotiations and specific country positions. The advisory groups are not provided with copies of the draft text, but are given sufficiently detailed information to assess the likely impact of the proposed provisions.
The willingness to disclose NAFTA negotiating details should not come as a surprise as the government undoubtedly wants to limit the possibility of unanticipated harms from the final text. Yet the entire process remains shrouded in secrecy (an official responded that the groups were not secret but no one had previously asked about them), a far cry from the promises of transparency promoted by the government. Moreover, while the number of NDAs and the existence of the advisory groups was revealed as part of the Access to Information request, any identifying information about which groups or individuals signed the agreements was fully redacted.
The secret two-tier approach damages the credibility of an otherwise open consultation. Encouraging Canadians to provide their views on Canada’s trade priorities makes sense given that trade has emerged as perhaps the single biggest economic issue facing the country and all Canadians have a stake in the outcome of the talks. However, the use of secret advisory groups creates an uneven playing field with some stakeholders positioned to provide better informed feedback than their competitors as well as many other interested parties and independent experts.
If the insider-access approach is to continue, Global Affairs Minister Chrystia Freeland and International Trade Minister François-Philippe Champagne should move quickly to lift the veil of secrecy behind the process, openly disclosing the nature and membership of each advisory group. Moreover, the advisory groups should be expanded to include a wider diversity of voices, including badly needed independent perspectives.
The government has emphasized its willingness to engage with the United States on NAFTA, even if President Donald Trump chooses to start the process of walking away from the deal. Its engagement with Canadians should be similarly robust, marked by a transparent, public advisory process, a clear commitment to balanced advice, and strict limits on the creation of privileged insider access.
The Globe and Mail. 12 Jan 2018. ARTICLE. No need for NAFTA panic … yet. Given the fickle nature of the U.S. President, reports that the country is pulling out of the pact should have been met with great skepticism
LAWRENCE MARTIN
Last weekend, U.S. President Donald Trump sat down to talk trade with Republican lawmakers at the presidential retreat at Camp David in Maryland.
His message was that it’s time for a trade crackdown. For the State of the Union address at the end of this month, decisions had to be finalized. For too long the United States has been hit with wrongful trade practices.
In the discussions, China was singled out for retaliation, particularly on intellectual property. The European Union was cited. Among products targeted for new import restrictions were solar, aluminum and steel. The United States imports more steel from Canada than any other country.
The North American freetrade agreement was discussed, but there was strong push-back from GOP lawmakers against any plan to ditch the accord. There’s no need to go that far, they told the President. Republican senators had met with him in the White House in weeks previous to deliver the same message.
No final decision was made at Camp David, but it was clear if Mr. Trump went to the exitroute extreme he would run afoul of his party, a party that has just gained a new-found unity with the passage of major taxcut legislation and the declining influence of nationalist Steve Bannon.
Worth noting is that the Camp David meeting came after Ottawa let it be known on Dec. 20 – although it wasn’t formally announced until this week – that it was launching a comprehensive challenge to American trade practices in a filing with the World Trade Organization (WTO). This brought on a condemnation from U.S. trade czar Robert Lighthizer, who called it an ill-advised attack. “Canada’s claims are unfounded and could only lower U.S. confidence that Canada is committed to mutually beneficial trade.”
There followed the Reuters report, roiling the markets, which said the White House was preparing to announce it would abrogate the accord. The White House disputed this, saying NAFTA negotiations would continue as planned.
Given the fickle nature of this presidency, the news report should have been viewed with great skepticism. Even if the President had decided to terminate NAFTA as the report suggested, he could very well – Donald Trump being Donald Trump – reverse that decision by sunrise tomorrow. In fact, on Thursday in an interview with The Wall Street Journal, Mr. Trump said that he would be “a little bit flexible” given the upcoming Mexican election.
Or if, after the Camp David session, he decided to stick with the accord, he could change course in the coming days or weeks as well. Reversals would only be in keeping with his erratic trajectory on this file to date. He’s said that the deal should be terminated, that it should, with respect to Canada, only be tweaked, and that it should be renegotiated. He almost killed the trade agreement last spring, only to make a last minute switcheroo.
In the hours before the diresounding Reuters report appeared, I interviewed senior Canadian officials. There was no sense that in their discussions with the Americans they had picked up any new doomsday signals, even after Ottawa’s WTO offensive became known.
The timing of that action, coming before crucial stages of the NAFTA negotiations, was puzzlingly provocative. Why not wait a couple of months to see how the next round of NAFTA talks unfolded? The WTO move, officials said, was primarily prompted by the endless dispute over softwood lumber. The move was long in the making, they added, the Americans having been warned all along that it was coming if their unreasonable approach didn’t cease.
A second objective, as Trade Minister François-Philippe Champagne noted on Thursday, was to demonstrate Canadian resolve, to show that Ottawa was not prepared to be pushed around.
Foreign Minister Chrystia Freeland was in Washington on Tuesday for discussions with top trade officials. She met with Commerce Secretary Wilbur Ross, but, while they get on well, they made no progress on the major issues in dispute on NAFTA.
Mr. Ross’s voice is important, but of course all will depend on the President’s latest fancy. After the recent publication of the Fire and Fury book alleging he has mental-health problems, Mr. Trump let the media witness a cabinet meeting this week as if wanting to show he was functioning in a stable manner.
Midterm elections are coming. The majority in Mr. Trump’s party supports the maintenance of a NAFTA with modernized provisions, as do major American stakeholders. The U.S. economy is moving along nicely, hardly in need of a jarring development that would shake the foundations of a largely successful continental trading system.
A stable mind would keep that system moored.
REUTERS. JANUARY 12, 2018. Canada welcomes Trump suggestion of NAFTA deadline extension
LONDON, Ontario (Reuters) - Canada welcomes the suggestion by U.S. President Donald Trump that the deadline for concluding talks to modernize NAFTA could be extended beyond the end of March, Foreign Minister Chrystia Freeland told reporters on Friday.
Trump told the Wall Street Journal on Thursday that “a lot of things are hard to negotiate” ahead of a Mexican presidential election in July.
“I thought that was a sensible suggestion from the President. I think all of us are mindful of the Mexican elections,” Freeland told reporters on the sidelines of a Cabinet retreat.
Talks to update the North American Free Trade Agreement, which are due to wrap up by end-March to avoid clashing with the Mexican vote, have bogged down amid major disagreements.
In his remarks on Thursday, Trump reiterated his threat to announce a U.S. withdrawal from the treaty unless major changes are made but said he was “leaving it a little bit flexible” until after the election.
“We have always felt that imposing artificial deadlines was not necessary from the Canadian standpoint ... I thought that was a constructive proposal from the president,” said Freeland.
Trump wants the 1994 deal between the United States, Canada and Mexico overhauled to better serve U.S. interests.
Reporting by David Ljunggren; Editing by Frances Kerry
BLOOMBERG. 11 January 2018. Trump Reiterates Nafta Threat, Linking Talks to Mexico Wall
By Andrew Mayeda
- President says gains from Nafta could indirectly pay for wall
- Canadian officials said this week risk of pullout is rising
President Donald Trump reiterated his threat to withdraw the U.S. from Nafta while saying that gains from a new deal could be used to pay for a wall at the Mexican border.
A day after Canadian officials said they viewed the odds of withdrawal as rising, Trump repeated his threat to pull out of the North American Free Trade Agreement if it can’t be reworked in his favor, the Wall Street Journal reported Thursday, citing an interview with the president. However, Trump said he was willing to be “a little bit flexible” about the deal until after Mexico’s presidential election in July. He didn’t elaborate on what that means.
The president also suggested gains to the U.S. from a revamped Nafta could be used to pay for a southern border wall, which he has previously called on Mexico to finance. “They can pay for it indirectly through Nafta,” the newspaper quoted Trump as saying. “We make a good deal on Nafta, and, say, I’m going to take a small percentage of that money and it’s going toward the wall. Guess what? Mexico’s paying.”
Shortly after Trump’s inauguration last year, plans for a meeting between the president and his Mexican counterpart fell apart over the issue of paying for the wall. High ranking Mexico government officials Thursday remained adamant on this point.
“Let this be clear: the issue of payment for a #border #wall is not, and will never be, part of the #NAFTA #negotiations #wearenotjoking,” Mexico’s chief Nafta negotiator Kenneth Smith Ramos wrote in a Twitter post. Economy Minister Ildefonso Guajardo said on his Twitter page that President Enrique Pena Nieto has been clear that Mexico won’t pay for the wall.
Canadian officials said this week there’s an increased likelihood Trump will follow through on his exit threat. Under the agreement, the U.S., Mexico and Canada can withdraw after giving six-months’ notice. The sixth round of talks is scheduled to start Jan. 23 in Montreal.
“Montreal is going to be a decisive round,” said Wendy Cutler, a former U.S. trade negotiator who is now vice president at the Asia Society Policy Institute in Washington. It will be a positive sign if negotiators can close more chapters and agree to a way ahead on the most contentious issues, she said.
While she puts the chances of U.S. withdrawal at 50-50, “it’s too early to throw in the towel on these negotiations,” Cutler said.
— With assistance by Nacha Cattan
BLOOMBERG. 11 January 2018. Canada Seeks Nafta Progress on Cars Amid Warnings Trump May Quit
By Josh Wingrove
- Freeland says Canada to discuss unconventional U.S. proposals
- Country is ‘prepared for every eventuality’ on Nafta, she says
A day after expressing concerns President Donald Trump will walk away from Nafta, Canada’s government signaled it will try to keep negotiations moving forward by seeking to break an impasse over autos.
Foreign Minister Chrystia Freeland pledged she’d bring “new ideas” to the next round of negotiations in Montreal this month while two government officials, speaking on condition they not be identified, said the country is ready to shift its approach on the contentious issue of automobile-trade rules. The officials didn’t provide specifics, but such a push could dovetail with a Mexican initiative to also focus on auto rules in an attempt to satisfy U.S. negotiators who have been demanding radical changes in the pact to balance out trade flows.
With little progress made after five rounds of talks, worries have mounted in Canada that Trump may give notice of withdrawal from the pact to press for concessions. The Canadian dollar, the Mexican peso and the stocks of companies that rely on the North American Free Trade Agreement slumped Wednesday after Canadian officials said they think the chances of such a move are rising. A White House official later said the president’s position on Nafta hadn’t changed.
“When it comes to the more unconventional U.S. proposals, we have been doing some creative thinking, we have been talking with Canadian stakeholders, and we have some new ideas that we look forward to talking with our U.S. and Mexican counterparts about in Montreal,” Freeland said Thursday in London, Ontario in comments aired by the Canadian Broadcasting Corp.
U.S. Message
One of the Trump administration’s top officials said the president was updated Thursday on trade talks. “He’s very pleased on where things are going,” Treasury Secretary Steven Mnuchin said in a White House press briefing. U.S. Trade Representative Robert Lighthizer “is doing an amazing job renegotiating Nafta, and we are expecting that will be renegotiated or we will pull out.”
Lighthizer is due to meet Mexico Economy Minister Ildefonso Guajardo in Washington this month ahead of the next round of talks. Freeland acknowledged the chances of the U.S. pulling out of Nafta are real and said she was taking Trump at his word that he’s considering it.
Shares of auto parts makers Magna International Inc. and Linamar Corp. rebounded Thursday. “I think if there’s goodwill on all sides, we could have a great outcome in Montreal,” Freeland said.
The three countries are also “close” to reaching agreements on some individual subjects, known as chapters, of Nafta, Freeland said, describing them as “bread and butter” issues. In addition to the thorny automotive issue, other contentious U.S. demands are on dairy, dispute panels, government procurement and a sunset clause.
The chief executive of the region’s biggest parts supplier, Magna, warned earlier this week that overly complex Nafta changes could leave U.S., Mexican and Canadian manufacturers vulnerable. “If it becomes too complicated, too bureaucratic, too costly that you can’t get low-cost, high-labor products into this region -- then all of a sudden we have damaged the whole Nafta region,” Chief Executive Officer Don Walker said. “It’s going to be a lose-lose-lose.”
Magna’s shares rose 0.4 percent as of 11:32 a.m. in New York after the news of Canada’s involvement. Linamar reversed declines, trading up 1 percent.
Flavio Volpe, president of the Toronto-based Automotive Parts Manufacturers Association, said progress was made on autos during a mini-round of talks last month in Washington. “All sides understand each other’s core imperatives much better now,” he said Thursday in an email. “The tone is respectful and everyone appears to actually want a solution that the others will be able to sign off on.”
The U.S. is proposing to raise the minimum content requirement, for a typical vehicle or auto part to be traded under Nafta, to 85 percent from the current 62.5 percent, while also requiring that a full 50 percent of content comes from the U.S. The proposals were flatly dismissed by Canada and Mexico. The U.S. also wants to substantially expand the so-called tracing list, which means more products and parts would need their origins tracked and documented.
‘Every Eventuality’
One of the Canadian officials said Freeland was referring to autos with her comments Thursday. Freeland didn’t say whether she believes the chances of a U.S. withdrawal notice are rising. Such a notice, which would be given under Article 2205, isn’t binding, meaning it could still be issued and Nafta still survive.
“The U.S. has been very clear since before the talks started that invoking Article 2205 was a possibility, and I think we need to take our neighbors at their word, take them seriously,” Freeland said. “So Canada is prepared for every eventuality.”
Finance Minister Bill Morneau, speaking at the same event, said Canada has “made preparations and considered every scenario” when it comes to Nafta. “What we are trying to achieve is an improvement in Nafta. We know that’s better for Canada and we will continue down that path.”
— With assistance by Greg Quinn
CIB
The Globe and Mail. 12 Jan 2018. Canada lobbied U.S. on CIB’s benefits
BILL CURRY
Finance Minister was prompted to raise the Crown corporation’s cross-border potential in a June meeting with U.S. Treasury Secretary.
Federal Liberals are promoting the Canada Infrastructure Bank to the Trump administration as a way to fund large cross-border projects.
Private speaking notes prepared for Finance Minister Bill Morneau show the minister was prompted to raise the bank with Steven Mnuchin in June when he hosted the U.S. Treasury Secretary.
And a new report prepared for the Washington State Department of Transportation says the bank could be a source of funding for an ultrahigh-speed rail line connecting Vancouver, Seattle and Portland. The high-level report, released on Dec. 15, estimated the high-speed rail line would cost between $24-billion (U.S.) and $42-billion.
The Canadian government recently announced the bank is now operational with a complete board of directors, even though it has yet to appoint a permanent president and chief executive officer. The $35-billion (Canadian) bank will begin reviewing projects in 2018.
The federal Crown corporation is designed to encourage institutional investors – such as pension funds – to lead the funding and management of large infrastructure projects with minority funding from the government bank.
Finance Canada briefing notes obtained by The Globe and Mail via Access to Information legislation show Mr. Morneau was urged to raise the infrastructure bank with Mr. Mnuchin during his one-day visit in June.
“Through this new Bank we will work with our partners to build transformative infrastructure, including projects that cross the Canada/U.S. border,” states a list of “suggested speaking points” prepared for Mr. Morneau by his deputy minister, Paul Rochon. “The Bank will also work with partners to develop a pipeline of infrastructure projects which could be attractive investment opportunities for large U.S. investors.”
Daniel Lauzon, a spokesperson for Mr. Morneau, confirmed the minister and the Treasury Secretary have discussed the bank and infrastructure several times.
“It’s been a point of discussion since their very first meeting,” he said in an e-mail. “We find that there is a lot of interest in the bank.”
Mr. Mnuchin’s visit to Ottawa included a business roundtable attended by top multinational executives with interests in infrastructure. The more than threedozen executives included leaders from Canada’s big banks, insurance companies, pension plans, asset managers; energy firms such as Suncor, Enbridge and TransCanada; auto makers, technology firms such as Apple, IBM Canada, OpenText and Microsoft; and other large companies including Cargill, GE Canada and WestJet. Microsoft was represented by Janet Kennedy, who later announced her departure from the company. Microsoft Canada is now headed by Kevin Peesker, who was born in Western Canada.
Microsoft is also funding studies of the proposed high-speed, cross-border rail link between Seattle and Vancouver. Washington State Governor Jay Inslee has said he is “bullish” on the project.
The region already has an extensive network of traditional passenger rail, known as the Cascades service. The recent Amtrak train derailment that killed three people in Washington State was on a new line aimed at allowing passenger trains to bypass freight traffic.
The latest Washington State study on high-speed rail makes several references to the Canada Infrastructure Bank (CIB).
“The CIB, once fully operational, could provide a potential key source to finance major infrastructure projects such as the [high-speed rail] project,” the report states. “The CIB could act as a center of expertise for advising all levels of government on infrastructure transactions involving private-sector investment.”
Meanwhile, the Finance Canada document makes reference to leaked documents from Donald Trump’s presidential campaign, which listed 50 priority infrastructure projects across the United States.
That list included two projects that cross the Canada-U.S. border: the Peace Bridge and the Gordie Howe Bridge. The nearly 100-year-old Peace Bridge between Fort Erie, Ont., and Buffalo has recently received extensive repairs.
The Canadian government is currently committed to covering all of the construction costs of the new Gordie Howe Bridge between Windsor and Detroit, including a new U.S. customs plaza. The plan is for Canada to recoup the cost of the American share of the project through tolls.
Mr. Trump is expected to release further details on his infrastructure plan in January.
VENEZUELA
The Globe and Mail. 12 Jan 2018. After Venezuela’s oil market meltdown, chocolate smooths way for entrepreneurs. Chocolate: Venezuela producers get a leg up in global market
CORINA PONS
In a modest apartment near a Caracas slum, nutrition professor Nancy Silva and four aids spread rich, dark Venezuelan cocoa on a stone counter to make chocolate bars to be sold in local shops that cater to the crisis-hit country’s dwindling elite.
Like some 20 recently launched Venezuelan businesses, Ms. Silva uses the country’s aromatic cocoa to make gourmet bars of the kind that can fetch more than $10 (U.S.) each in upscale shops in Paris or Tokyo. The oil-rich but recession-devastated nation’s bureaucracy makes large-scale exports nearly impossible for small businesses.
As a result, most of her bars are sold locally for less than one U.S. dollar – well out of reach of millions of Venezuelans who earn less than that in a week, but reasonably priced for the well-heeled of an increasingly two-tiered economy.
But entrepreneurs who have launched new Venezuelan chocolatiers in recent years say producing gourmet bars allows them to make a living amid the collapse of a socialist economic system – and dream of exports as a golden opportunity down the road.
“Our real oil is cocoa,” said Ms. Silva, owner of the chocolatier Kirikire that in 2014 won an award from the prestigious Salon du Chocolat fair in Paris. “In Europe, they’re snatching up these bars.”
Ms. Silva faces constant operational challenges due to hyperinflation and Soviet-style product shortages. But these are offset by steady access to high-quality aromatic cocoa from a cocoa farm in eastern Venezuela owned by her family.
Her bars are sold in high-end Caracas grocery stores, delis and liquor stores, where everything from staple products to luxury goods are amply available to the well-heeled – in contrast to the long lines and bare shelves of most shops.
Ms. Silva is now focused on getting her chocolate to France, where she once sold a single kilo of her chocolate for the equivalent of 80 euros $120, which is today the equivalent of five years of minimum-wage salary in Venezuela.
Standing in her way are a range of permits such as customs authorizations and sanitary inspections that take months in Venezuela’s notoriously inefficient bureaucracy. The Information Ministry did not respond to a request for comment.
Venezuela was the world’s leading cocoa producer at the end of the 18th century when it was still a Spanish colony, according to Jose Franceschi, who has written books about cocoa.
But the cocoa trade was overshadowed by the rise of the oil industry in the early 20th century. Critics say it was further weakened by state takeovers under late president Hugo Chavez, who boosted state involvement in the economy as part of promises to create a society of equals.
But since the crash of oil markets, Venezuela has become a sharply divided society where oil engineers and public hospital doctors rarely make as much as $50 a month, while a small group citizens can afford fine dining and gourmet products.
Output of 16,000 tonnes per year is less than 1 per cent of the global total, and less than 10 per cent of the production of regional heavyweights Brazil and Ecuador. Many gourmet bars made in the United States now prominently advertise the use of Venezuelan cocoa but generally mix in other less-desirable cocoas. Bars made in Venezuela, in contrast, are made with 100 per cent local cocoa.
This gives the new Venezuelan chocolatiers a leg up as they tap into the global ‘bean-to-bar’ movement, in which chocolate makers oversee the entire process of turning cocoa fruit into sellable treats.
Many small chocolatiers only manage to get products to foreign markets by carrying them in suitcases on commercial flights, though well-established brands have formal export operations to the United States and Europe.
ENERGY
StatCan. 2018-01-12. Crude oil and natural gas: Supply and disposition, October 2017
- Production of crude oil and equivalent products: 20.3 million cubic metres, October 2017, 1.5% increase (12-month change)
- Exports of crude oil and equivalent products: 16.2 million cubic metres, October 2017, 6.1% increase (12-month change)
- Source(s): CANSIM table 126-0003: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=1260003&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=
Canada produced 20.3 million cubic metres (127.9 million barrels) of crude oil and equivalent products in October, up 1.5% from October 2016. October 2017 marks the 13th consecutive month with a year-over-year increase.
Crude oil production
Increased production of non-upgraded crude bitumen (+9.3%) and light and medium crude oil (+5.1%) were offset by declines in synthetic (-18.7%) and heavy (-2.1%) crude oil in October. The sizeable reduction in synthetic crude oil production was largely due to the temporary shutdown of an Alberta facility for planned maintenance.
Chart 1: Production of crude oil and equivalent products
Production of conventional and non-conventional crude oil
Crude oil production (excluding equivalent products) totalled 18.6 million cubic metres in October. Non-conventional crude oil production, which consists of non-upgraded crude bitumen and synthetic crude oil, was down 2.5% from October 2016 to 12.7 million cubic metres. This marked the first year-over-year decrease for non-conventional crude oil production since August 2016.
Meanwhile, conventional production of light, medium and heavy crude oils increased 2.7% compared with October 2016, to 6.0 million cubic metres.
Chart 2: Production of conventional and non-conventional crude oil
Provincial production
Alberta produced 16.4 million cubic metres of crude oil and equivalent products, up 1.8% from October 2016, and accounted for 80.5% of total Canadian production. Saskatchewan (11.8%) and Newfoundland and Labrador (5.3%) were also key contributors.
Refinery use of crude oil
Input of crude oil to Canadian refineries totalled 8.3 million cubic metres in October, up 23.0% from the same month a year earlier. Conventional crude oil accounted for 66.9% of the total, while non-conventional crude oil represented the remaining 33.1%. Light and medium crude oil (4.5 million cubic metres) and synthetic crude oil (2.3 million cubic metres) were the main types of crude oil used by Canadian refineries.
Exports and imports
Exports of crude oil and equivalent products were up 6.1% compared with the same month in 2016, to 16.2 million cubic metres in October.
Imports to Canadian refineries, which tend to be volatile, were up 24.9% to 2.7 million cubic metres.
Chart 3: Exports and imports of crude oil and equivalent products
Closing inventories
Year over year, closing inventories of crude oil and equivalent products were down 7.6% to 17.7 million cubic metres in October. The total was comprised of transporters (11.6 million cubic metres), refineries (3.6 million cubic metres) and fields and plants (2.5 million cubic metres).
Natural gas production
Marketable natural gas production in Canada totalled 14.2 billion cubic metres in October, up 6.3% from the same month in 2016. Alberta (73.0%) and British Columbia (24.6%) accounted for the vast majority of Canadian production.
FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/180112/dq180112a-eng.pdf
REUTERS. JANUARY 11, 2018. Oil retreats from $70 highs but set for fourth week of gains
Ahmad Ghaddar
LONDON (Reuters) - Oil prices eased on Friday after hitting a three-year high of more than $70 a barrel the previous day, but they remained on track to post a fourth straight week of gains.
Brent crude futures LCOc1 traded 6 cents lower at $69.20 a barrel at 1449 GMT. The contract broke above $70 on Thursday for the first time since December 2014.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $63.66, down 14 cents. WTI the day before rose to its strongest since late 2014 at $64.77.
“It is remarkable to see that most market analysts believe that prices have rallied too far since consensus forecasts are significantly lower than the current spot prices,” Hans van Cleef, senior energy economist at ABN Amro, said in a note.
“On the other hand, most investors are still positioned to benefit from further price gains,” he said.
Analysts and traders have warned about the risk of a price correction since the start of 2018, but they say overall market conditions remain strong, mainly due to output cuts led by the Organization of the Petroleum Exporting Countries and Russia.
Fatih Birol, head of the Paris-based International Energy Agency, said on Friday that oil prices at $65 to $70 risked encouraging more oversupply from U.S. shale drillers.
Gulf OPEC producers plan to keep their oil output in the current quarter below the year-earlier level despite strong demand growth and a drop in global inventories, a senior OPEC source familiar with Gulf oil thinking said.
In addition to the OPEC and non-OPEC production cuts of 1.8 million barrels per day (bpd) that are due to last until the end of 2018, oil prices have found support from eight consecutive weeks of U.S. crude inventory drops.
U.S. commercial crude stocks C-STK-T-EIA fell by almost 5 million barrels in the week to Jan. 5, to 419.5 million barrels. That was slightly below the five-year average of just over 420 million barrels, the target for OPEC and others cutting output.
Relatively weak Chinese December oil data weighed on prices, traders and analysts said. China’s crude imports in December fell 9 percent month-on-month to 33.7 million tonnes, or 7.97 million bpd, customs data showed.
This has contributed to a fall in Singapore refinery profit margins DUB-SIN-REF to below $6 per barrel this month, their lowest seasonal level in five years, leading some refiners to scale down crude runs.
Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson and Edmund Blair
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LGCJ.:
