CANADA ECONOMICS

NAFTA

Innovation, Science and Economic Development Canada. January 23, 2018. Science Minister Duncan to speak to North Carolina Chamber of commerce

Raleigh, North Carolina — The Honourable Kirsty Duncan, Minister of Science, is travelling to North Carolina’s capital to meet with local and state officials and to deliver a keynote address on a modernized North American Free Trade Agreement at the North Carolina Chamber of commerce.

• Date: Thursday, January 25, 2018
• Time: 3:00 p.m. (EST)
• Location: North Carolina Chamber, 701 Corporate Center Drive, Suite 400, Raleigh, North Carolina

Global Affairs Canada. January 23, 2018. Parliamentary Secretary Leslie to advocate Canada-United States trade at World Affairs Council of Charlotte in North Carolina

Ottawa, Ontario - No two countries in the world have a stronger or more integrated economic relationship than the United States and Canada. The Government of Canada is working closely with the United States to strengthen the countries’ trade relationship and create new opportunities for workers, businesses and middle-class families on both sides of the border.

As part of these efforts, Lt.-Gen. (ret.) the Honourable Andrew Leslie, Parliamentary Secretary to the Minister of Foreign Affairs (Canada-U.S. Relations), will visit Charlotte, North Carolina, from January 24 to 25, 2018, to deliver a speech at the World Affairs Council of Charlotte. The Parliamentary Secretary will stress the importance of NAFTA as an engine of growth and prosperity for North Carolina, as well as for the rest of the United States and for Canada.

During his visit, Parliamentary Secretary Leslie will meet with representatives Alma Adams and Richard Hudson to highlight the importance of the Canada-North Carolina trade relationship and underscore the extent to which their economic partnership is mutually beneficial. The Parliamentary Secretary will also deliver remarks at the University of North Carolina, where he will engage with students and faculty members on a range of Canada-United States issues.

Quotes

“Canada’s strong commercial ties to North Carolina are important examples of our deep partnership, one that creates new opportunities for workers, businesses and middle-class families on both sides of the border.”

- Lt.-Gen. (ret.) the Honourable Andrew Leslie, Parliamentary Secretary to the Minister of Foreign Affairs (Canada-U.S. Relations)

Quick Facts

• Canada is North Carolina’s number one trading partner.
• North Carolina sells more goods to Canada than to its next two largest foreign markets combined: Mexico and China.
• Almost 250,000 jobs in North Carolina depend on Canada-United States trade and investment.
• Canada and the United States share the world’s longest secure border, across which approximately 400,000 people, and goods and services worth $2.4 billion, cross daily.
• 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.
• Canada is the number one export destination for most U.S. states, and cross-border trade and investment support nearly 9 million jobs in the United States.

Canada-United States relations: http://international.gc.ca/world-monde/united_states-etats_unis/relations.aspx?lang=eng&_ga=2.55637801.361332789.1516635751-1371245540.1491838080
Canada-North Carolina relations: http://international.gc.ca/world-monde/united_states-etats_unis/business_fact_sheets-fiches_documentaires_affaires.aspx?lang=eng&_ga=2.55637801.361332789.1516635751-1371245540.1491838080
North American Free Trade Agreement (NAFTA): http://international.gc.ca/trade-commerce/trade-agreements-accords-commerciaux/agr-acc/nafta-alena/fta-ale/background-contexte.aspx?lang=eng&_ga=2.181687845.361332789.1516635751-1371245540.1491838080

The Globe and Mail. 24 Jan 2018. Barrie McKenna: If NAFTA fails, this deal is next best thing
BARRIE McKENNA, Columnist

Ottawa’s juggling of various free-trade talks is like bewildering games of simultaneous chess.

Canada is now involved in multiple and sometimes overlapping negotiations with more than a dozen trading partners, who are themselves enmeshed in talks with various other countries. There is the continuing renegotiation of the North American free-trade agreement, early talks on possible deals with China and India, plus a massive deal with 10 Pacific Rim countries, recently rebranded as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

To the surprise of many, the CPTPP has jumped to the top of Ottawa’s to-do list. On Tuesday, Ottawa agreed in Tokyo to sign the sweeping deal by March with Japan, Mexico, Australia, New Zealand, Vietnam, Chile and four other countries. (U.S. President Donald Trump pulled his country out of the deal’s previous incarnation, the Trans-Pacific Partnership, last year.)

This is a bit of a surprise because Canada balked at doing roughly the same deal just two months ago – in part because it was worried it would mess up sensitive NAFTA negotiations with the United States over issues such as autos, dairy, cultural industries and intellectual property. Canadian officials insist they have secured important changes to allay some of their earlier concerns, most notably on autos and intellectual property.

More importantly, the government is calculating that a bird in the hand is worth two in the bush. The certainty of a deal that opens up opportunities in the massive Japanese market supersedes the messy uncertainty of the NAFTA talks, which continue in Montreal this week. (On the other hand, Japan, Australia and the other Pacific Rim countries made it clear they would do the deal with or without Canada.)

That’s a remarkable shift, given the importance of the U.S. market to Canada’s economy. Ottawa’s embrace of the Asia trade deal – along with its inherent risks – strongly suggests Canadian officials don’t expect a successful renegotiation of NAFTA any time soon.

In fact, a deal on NAFTA in the near term is “probably the least likely” outcome, said Steve Verheul, Canada’s chief NAFTA negotiator, last week. Speaking at a meeting of dairy industry officials in Ottawa, Mr. Verheul said the more probable outcome is either a U.S. pullout from the deal or negotiations that drag on indefinitely, according to an account of his speech by the publication Ontario Farmer.

“We’ll keep riding this horse and see where it’s headed,” Mr. Verheul added.

Unfortunately, negotiating with Mr. Trump is more like riding a bucking bronco. In recent days, the President tweeted that NAFTA is a “bad joke” and repeated threats to walk away from the deal. But he has also acknowledged he’s facing intense pressure from U.S. industry groups to stay in NAFTA and floated the idea of extending the deadline for reaching a deal until after the Mexican elections on July 1.

Pushback from Congress and the looming midterm elections in November further complicate the negotiations.

The United States has put a series of demands on the table that Canada considers non-starters, including the end of binding state-to-state dispute resolution, a five-year sunset clause, dismantling Canada’s supply management regime for dairy and poultry and minimum U.S. content in North American cars.

The long game for Canada means resisting these demands. As Mr. Verheul put it, the goal is “to make trading easier than it is now, and at the worst doing no harm.”

Canada is already laying the groundwork for life without NAFTA should it come to that. Ottawa recently launched a sweeping trade case that accuses the United States of flagrantly violating World Trade Organization (WTO) rules in its handling of almost 200 trade investigations going back decades. Among other things, Ottawa argues that the United States is breaking WTO rules in the way it handles anti-dumping and subsidy cases, including continuing disputes involving Canadian lumber, newsprint and Bombardier jets. It’s also a veiled warning that Ottawa intends to make the United States live by WTO rules, regardless of what happens to NAFTA.

Saying yes to the CPTPP similarly sends the message that Canada isn’t going to put its global trade ambitions on hold as NAFTA lurches toward an uncertain future.

THE GLOBE AND MAIL. JANUARY 23, 2018. Canada offers to engage on Trump’s toughest demands in effort to spur NAFTA talks
ADRIAN MORROW

MONTREAL - Canada formally opened a crucial home-turf round of the deadlocked NAFTA renegotiation with a challenge to the United States, offering to make deals on the Trump administration's toughest demands – but only if the U.S. is willing to compromise.

"We've come to Montreal with a lot of new ideas, a lot of creative strategies to bridge some of the gaps in the negotiations," Ottawa's chief negotiator, Steve Verheul, told reporters Tuesday at the brutalist Hotel Bonaventure in Canada's snow-blanketed second-largest city. "We have high hopes for making progress this week, but of course it depends on the other partners as well."

Asked whether the U.S. was open to playing ball on its most contentious proposals, Mr. Verheul replied: "We're hoping to see that this week. We haven't seen it quite yet, but we've just started. We're hoping that when we're bringing flexibility to the table, we'll see that reciprocated on the other side."

The three countries are at loggerheads, with the U.S. demanding the North American free-trade agreement be tilted in its favour in several key areas – including auto manufacturing, government contracting and dispute resolution – and Canada and Mexico fighting back against such changes.

Now Ottawa is looking for middle ground. As The Globe has previously reported, Mr. Verheul's team plans to present suggestions this week on autos and Chapter 11, a system that allows corporations to sue governments in front of special NAFTA tribunals, in hopes of getting the logjammed talks moving.

Mr. Verheul said he was not planning formal counter-proposals on the U.S.'s harshest demands, but rather to "talk about ideas" and "generate some traction" to see what the three countries might agree on.

U.S. President Donald Trump, at whose behest NAFTA is being renegotiated, has offered mixed signals on whether he is willing to give ground in the talks or will simply pull out of the pact if his demands aren't met.

"NAFTA's moving along pretty well," he said Tuesday at the White House during a ceremony to impose tariffs on washing machines and solar products. "I happen to be of the opinion that if it doesn't work out, we'll terminate it."

Canadian officials are continuing to cultivate relationships with members of Mr. Trump's inner circle in hopes of creating goodwill for a deal and understanding what the President wants. Foreign Minister Chrystia Freeland has built a rapport with White House Chief of Staff John Kelly, said one source. Mr. Trump's economic and security czars, Gary Cohn and H.R. McMaster, are also regular points of contact, as are Mr. Trump's daughter Ivanka Trump and her husband, Jared Kushner, the source said.

Mexican chief negotiator Kenneth Smith Ramos said Tuesday he was hopeful talks would make progress.

"We believe that the process is advancing well enough," Mr. Smith Ramos, speaking in French, told reporters in a hallway outside the negotiations. "We're trying to move forward on the most difficult subjects, but also on the subjects meant to modernize NAFTA."

Canada's pitch on autos will revolve around boosting the amount of required North American content in vehicles made in the free-trade zone, in a bid to get the U.S. to drop its more protectionist demand that vehicles made in Canada and Mexico contain 50-per-cent U.S. content.

Ottawa will also look to bridge the gap on Chapter 11, which the U.S. wants to turn into an opt-out part of the trade pact – allowing Washington to choose not to be covered by it – and which Canada wants to professionalize with a more efficient system for hearing disputes.

In addition to the tougher matters on the table, Mr. Smith Ramos said the three sides were close to reaching deals on several less contentious files, including telecommunications, food safety, technical barriers to trade and an anti-corruption section.

Trade consultant Peter Clark said Mr. Verheul is trying to signal to the U.S. that Canada is ready to engage on the U.S.'s tough demands if Washington backs off its "take, take, take" attitude. He said Mr. Verheul's decision to raise potential compromises as "new ideas" rather than formal counter-offers is key, as it allows Canada to suss out the U.S.'s willingness to negotiate without officially conceding anything.

Ottawa's imperative is to figure out how to offer Washington something it can claim as a victory that won't hurt Canada, Mr. Clark said in an interview. "From our perspective as Canadians, what we have to do is try to find a way to make Trump look good without killing ourselves."

TPP

The Globe and Mail. 24 Jan 2018. Canada joins 10 countries in revised TPP trade deal. Agreement, which excludes U.S., comes as Ottawa continues NAFTA negotiations
STEVEN CHASE, OTTAWA
GREG KEENAN, TORONTO


Canada and 10 other countries, including Japan, have reached a deal on a new Pacific Rim trade accord that does not include the United States.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which Trade Minister François-Philippe Champagne announced on Tuesday, will benefit Canada’s agricultural sector, chiefly beef and pork producers, which are being granted market access to the once-sheltered Japanese market – access that rivals in Australia already enjoy. But Canada’s dairy farmers, the head of the country’s largest private-sector union and a major portion of the Canadian auto industry say the new deal makes major concessions to foreign competitors that will cost jobs in Canada without yielding sufficient reciprocal benefits.

Ontario Premier Kathleen Wynne said she is concerned the deal could hurt Ontario’s auto industry. Trade “diversification must not come at the expense of key Ontario sectors, including auto,” Ms. Wynne said. “I have heard the concerns from many in our auto industry over the course of TPP negotiations, and I understand and share any concerns that this agreement could in any way affect the competitiveness of Ontario’s auto sector.”

The accord is a revised version of the Trans-Pacific Partnership (TPP) agreement reached in 2015, before U.S. President Donald Trump pulled the United States out of the negotiations last year. The text has not been made public, but the Canadian government has consulted with industry over the past few months on the contents. Talks to fine-tune it will continue until March. Even without the United States, the rewritten pact will create a market of 495 million people and a combined annual economic output of $13.5-trillion (U.S.).

The Canada-European Union trade pact and the new TPP deal will help Canada diversify trade away from the United States, where economic relations under the protectionist Trump administration have made it difficult for businesses to invest in selling to Americans.

Canada, which had been holding out as Japan led an effort to strike a revised TPP deal, agreed at meetings in Tokyo this week after securing changes to the deal.

Prime Minister Justin Trudeau lauded the revised Trans-Pacific Partnership (TPP) as “the right deal” for Canada.

“Our government stood up for Canadian interests and this agreement meets our objectives of creating and sustaining growth and prosperity and wellpaying middle-class jobs today and for generations to come,” he said at the World Economic Forum in Davos, Switzerland.

Key sectors of the auto industry in Canada oppose the new agreement. Representatives of Detroit-based companies and Canadian parts makers say Canada should not strike deals that will affect vehicle production here while Ottawa is still trying to renegotiate the North American free-trade agreement with the United States and Mexico, which has separate and potentially conflicting rules for foreign content.

Auto-parts makers say the TPP would open them up to more intense competition from low-cost countries such as Vietnam and Malaysia. The Detroit Three auto makers say it will eliminate tariffs on Japan-made vehicles entering the Canadian market while not removing existing non-tariff barriers in Japan.

The Canadian government said it has reached a bilateral deal with Japan to resolve those non-tariff barriers, which include municipal zoning laws that prevent some foreign auto makers from building dealerships.

Flavio Volpe, president of the Automotive Parts Manufacturers’ Association, and Mark Nantais, president of the Canadian Vehicle Manufacturers Association, said they were not told negotiations on the TPP were taking place on the weekend.

They and Joseph Galimberti, president of the Canadian Steel Producers Association, sent a letter dated Monday asking Mr. Champagne to suspend further TPP discussions on autos and steel until NAFTA talks have concluded.

“As NAFTA renegotiation continues, we are particularly concerned that moving forward with a [TPP] agreement with different terms from the renegotiated NAFTA will hurt the competitiveness and ongoing success of Canada’s auto and steel sectors,” they wrote.

A representative of Canadian pig farmers said the new deal improves access to markets.

“The [deal] is of tremendous importance to Canadian pork producers who export over 70 per cent of their products to over 100 countries,” said Rick Bergmann, chairman of the Canadian Pork Council.

The Dairy Farmers of Canada decried the agreement, pointing out that it grants the same level of tariff-free access to this country’s dairy market that Canada conceded in 2015 when the United States was still part of TPP negotiations.

Jacques Lefebvre, CEO of the Dairy Farmers of Canada, said it makes no sense to give as much tariff-free dairy market access to the other countries in TPP talks without the benefits of U.S. participation. “The negotiating logic is really hard to understand,” Mr. Lefebvre said.

Mr. Volpe’s organization has long been concerned that TPP rules could invite a flood of cheaper Asian-made products and jeopardize the future of 81,000 auto-parts jobs in Canada.

He accused Canada of helping beef and pork producers at the expense of auto industry workers.

“We’re signing a bad deal because we hope to sell more products that grow on four legs,” Mr. Volpe said, “[It’s] a progressive trade agreement that sells products we’ve been mastering since Samuel de Champlain.”

The Japan Automobile Makers Association of Canada supports the TPP, which will cut tariffs for Japanese vehicles entering this country.

Also backing TPP is Linda Hasenfratz, CEO of global parts maker Linamar Corp., which is based in Guelph, Ont.

Jerry Dias, president of Unifor, Canada’s largest private-sector union, warned that the TPP will start a “race to the bottom” that sends jobs to low-wage TPP countries. “Despite a new name, there is nothing remotely progressive about the TPP, and Unifor remains opposed to this bad trade.”

The Canadian government said it has obtained changes to the original deal that also include:

Exemption for Canada’s cultural industries to shelter them from competition;

Suspension of some changes to intellectual property rules that would have extended copyright protections and hiked the cost of pharmaceutical drugs;

Suspension of provisions that would have allowed foreign investors to sue the Canadian government when an investment contract was breached or when Ottawa revokes authorization to invest;

“Fully enforceable” chapters on labour and environment.

John Manley, head of the Business Council of Canada, said the new agreement sends a message that Canada believes in liberalized trade with the fastest-growing region of the world.

“By saying Canada is part of TPP – without saying so – the Prime Minister is saying: ‘I am not Donald Trump,’ and that is a good thing,” Mr. Manley told reporters in Davos.

REUTERS. JANUARY 23, 2018. Canada to sign Pacific trade deal, labor and auto sectors fume
David Ljunggren, David Lawder

MONTREAL (Reuters) - Canada said on Tuesday it would sign onto a revised 11-member Asia-Pacific trade pact after pushing to secure a better deal, underpinning a government drive to diversify exports amid doubts over NAFTA.

Prime Minister Justin Trudeau told reporters at the World Economic Forum in Davos that he helped push for an improved deal, showing how important the trade file has become for him personally.

But a major labor union and a group representing auto parts manufacturers said the deal would cause job losses.

Trade officials signed off on a final text earlier in the day after a meeting in Tokyo to overcome challenges such as Canada’s insistence on protection of its cultural industries.

The deal agreed to the suspension of intellectual property and investment dispute provisions that had been a concern. Trade Minister Francois-Philippe Champagne said the deal would also grant full access to Japan’s auto market for the first time.

“Diversification is key for Canada ... for us opening up markets is essential,” he told reporters in Toronto.

A previous round of talks last November ended in disarray after Canada objected to parts of the proposed text and Trudeau was lambasted for missing a key meeting with Japan’s prime minister on how to secure a deal.

The breakthrough came on the same day that negotiators started the sixth and penultimate round of talks on the North American Free Trade Agreement, which U.S. President Donald Trump has repeatedly threatened to abandon.

The Unifor private sector union and Canada’s Automotive Parts Manufacturers Association complained Champagne had not warned them at meetings earlier this week that the deal was about to be agreed.

Unifor head Jerry Dias said that at a time when Canada is facing U.S. demands at NAFTA to increase the North American content of autos from the current 62.5 percent, the new TPP deal would allow the duty-free import of parts which contained a maximum of 35 percent of components from member nations.

This would allow the greater use of cheaper parts from Asian nations, causing havoc in the domestic industry, he added.

“The simple reality is what happened with the TPP completely undermined what’s happening in Montreal over NAFTA,” said Dias.

“They have just cut the legs off of the entire Canadian negotiating team here on NAFTA,” he told reporters.

The Canadian Agri-Food Trade Alliance welcomed the deal, saying it would help boost food exports to Japan.

Writing by David Ljunggren; Editing by Chizu Nomiyama and Susan Thomas

BLOOMBERG. 24 January 2018. Why a TPP Without the U.S. Is Still a Big Deal
By Isabel Reynolds  and David Tweed

The Trans-Pacific Partnership is back, even after being spurned by the biggest of its 12 intended members. When President Donald Trump withdrew the U.S. a year ago, the prospects for the trade pact looked bleak. Instead, leaders from Japan’s Shinzo Abe to Canada’s Justin Trudeau worked through a series of disputes to forge an agreement to keep the framework alive. And while the hope is that the U.S. will return to the fold, the TPP -- with a new, tongue-twister of a name -- will prove an economic and political force in its own right. And one that doesn’t include China.

1. What is the new TPP?

It’s much like the original agreement in 2015, expanding free-trade rules beyond agriculture and services, embracing the digital economy and adopting stronger protections for intellectual property. The wording agreed in Tokyo this week is essentially the same, but with some elements (for example, dispute settlement) suspended. The bottom line: Unlike a traditional trade deal covering the exchange of goods and services, it also locks in other requirements, from labor issues and the environment to government procurement.

2. What’s it called and when will it start?

Trade ministers from the 11 remaining nations -- Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam -- intend to sign up in Chile on March 8. At least six countries must then ratify the agreement for it to come into force. Japan hopes this will happen in 2019. The new name? The Comprehensive and Progressive Agreement for Trans-Pacific Partnership, or CPTPP.

3. What will the economic impact be?

The 11 members combined account for about 13 percent of global gross domestic product -- a little over half the U.S. share of 24.5 percent. But each can expect additional growth in national income of about 1 percent on average by 2030, according to an analysis by Professor Shujiro Urata of Waseda University in Tokyo.

4. What does it mean for Japan?

As by far the largest economy in the group, Japan made much of the running in negotiations, showing it can tread its own path on trade even while relying on the U.S. in terms of national security. It’s seeking to defend the rules-based economic order in the Asia-Pacific region to counter China’s growing sway, at a time when the U.S. appears to be paring back its influence. China hasn’t shown serious interest in joining the CPTPP and has been in talks for another trade agreement called the Regional Comprehensive Economic Partnership, or RCEP.

5. What does the new TPP mean for China?

A lost opportunity. If the 16-nation RCEP had come into being in a TPP-free world, China would have enhanced its regional dominance, giving President Xi Jinping a platform to further draw his Asian neighbors into his embrace. Now, China must compete with Japan at the head of a rival trading group.



6. Does it affect talks on RCEP?

It may suck out some of the momentum, according to Stephen Nagy, a Tokyo-based fellow with the Asia Pacific Foundation of Canada. Countries like New Zealand may insist on a higher-quality deal and it may be harder to get India to agree to dismantle its import tariffs and allow entry of duty-free Chinese goods. China is busy negotiating more than a dozen trade agreements and is focused on Xi’s pet project, a web of projects from Asia to Europe called the Belt and Road Initiative.

7. Can other countries join the CPTPP?

Yes. It’s an open agreement with the flexibility to include others. Thailand, Indonesia, the Philippines and Taiwan have all indicated interest in joining, as has the U.K. South Korea is a party to RCEP negotiations, but has also talked about joining TPP.

8. What does the CPTPP mean for Nafta?

The North American Free Trade Agreement is another of Trump’s punching bags -- the new TPP is unlikely to change that. Under the CPTPP, Canadian automakers will include more Chinese auto parts in Canadian-made vehicles destined for the U.S. That runs counter to Trump’s plan to raise the Nafta share of a typical car built in the U.S., Mexico or Canada to 85 percent, from 62.5 percent currently -- including 50 percent in the U.S.

WEF

The Globe and Mail. 24 Jan 2018. Canada won’t follow on U.S. tax cuts, Trudeau says in Davos speech
ROBERT FIFE, DAVOS, SWITZERLAND, OTTAWA BUREAU CHIEF

Prime Minister Justin Trudeau sent a strong message to the global super-rich on Tuesday that Canada won’t be slashing taxes and regulatory red tape to compete with Donald Trump’s United States.

In an keynote speech to the World Economic Forum, Mr. Trudeau called on corporate chief executives to put workers before profit and take major steps to boost the role of women in the work force and tackle sexual harassment.

“Too many corporations have put the pursuit of profit before the well-being of their workers … but that approach won’t cut it any more,” Mr. Trudeau told the elite gathering at the chic ski resort of Davos. “We are in a new age of doing business – you need to give back.”

Mr. Trudeau has been under pressure from Canada’s business community to cut taxes and regulations to match the competitive reforms undertaken by Mr. Trump and the Republican Congress.

The Prime Minister, who also met with CEOs of several major multinationals on Tuesday to pitch for investment dollars in Canada, said too many people are being left behind by automation and globalization.

“People have been taken advantage of, losing their jobs and their livelihoods,” he said.

“All the while, companies avoid taxes and boost record profits with one hand, while slashing benefits with the other.”

Mr. Trudeau’s comments were the strongest signal yet that his government has no desire to follow the U.S. example of massive tax cuts for the wealthy to spur economic growth.

“We should ask ourselves – do we want to live in a world where the wealthy hide in their gated enclaves, while those around them struggle?” he said.

Mr. Trudeau credited the Liberal government’s decision to tax wealthier Canadians and boost spending on social programs, such as the child-care benefit and expanded Canada Pension Plan, for Canada having the best growth rate among Group of Seven countries and the lowest unemployment in 40 years.

“Asking the wealthy to pay a little more and giving more benefits to those who really need it has resulted in growth that has benefited everyone, that is truly lifting all boats,” he said.

Mr. Trudeau’s approach to managing the economy was praised by Ulrich Spiesshofer, president and CEO of ABB Group, the massive Swiss robotics and industrial automation firm that recently set up a new $90-million office in Montreal.

“We think Canada is the place to be. I congratulate Canada and keep on going this way,” Mr. Spiesshofer said, as he also played down uncertainty over the North American free-trade agreement.

But John Manley, the head of the Business Council of Canada, said Mr. Trudeau is making a mistake by not taking into account that dramatic U.S. tax changes will drive investment dollars south of the border.

“The U.S. tax reform is in some ways a bigger challenge for us than the uncertainty over NAFTA because it really eliminates what has been really for quite a number of years a tax advantage for Canadian business,” he told reporters. “Regrettably, they are the big market so we need some advantage, otherwise investment tends to flow in their direction.”

In his speech to about 1,000 people, Mr. Trudeau was applauded when he spoke about the #MeToo movement and the women’s march for equal rights, saying sexual harassment is a systemic problem in the workplace.

“When we receive those complaints, we must take them seriously,” Mr. Trudeau said.

“As women speak up, it is our responsibility to listen and, more importantly, to believe.”

The Prime Minister also urged global corporations to start hiring, promoting and retaining women, especially in executive jobs.

Mr. Trudeau pointed to a McKinsey report that estimates that by narrowing the gender gap, Canada could add $150billion to its economy. He pointed to the government’s promise to bring in gender payequity legislation for federally regulated industries and boasted about Ottawa’s actions on parental leave.

“As corporate leaders, consider a gender-balanced board or gender-balanced project teams,” he said. “Any time we’re looking for a new hire, we should be identifying women candidates at a rate equal to men.”

Women make up only 21 per cent of the 2,500 people at the ritzy World Economic Forum, where the global elite each pay $85,000 to attend all the events in Davos.

The Prime Minister is a popular figure at the Davos schmooze-fest. He attended a reception hosted by former Vanity Fair editor Tina Brown and Credit Suisse CEO Tidjane Thiam on Tuesday evening and later went to a dinner held by Chinese multibillionaire Jack Ma, founder of Alibaba Group.

On Wednesday, Mr. Trudeau will participate in a Canada-U.S. economic roundtable where the focus will be on NAFTA.

THE GLOBE AND MAIL. JANUARY 24, 2018. TRADE. Trudeau goes on NAFTA offensive with key U.S. executives in Davos
ROBERT FIFE, OTTAWA BUREAU CHIEF

DAVOS, SWITZERLAND - Prime Minister Justin Trudeau urged top U.S. corporate chief executives to highlight the benefits of the North American free-trade agreement to U.S. workers as President Donald Trump's threat to cancel the continental treaty looms.

Mr. Trudeau held a private roundtable at the World Economic Forum in Davos, Switzerland, on Wednesday with some key executives of major U.S. multinational corporations, including Dow Chemical, UPS and global investment firm BlackRock, about the economic uncertainty facing NAFTA.

"We just had a great conversation about all the jobs in Canada and the United States that rely on NAFTA," Mr. Trudeau told reporters after the meeting. "We talked a lot about ensuring citizens and workers and families on both sides of the border understand that the integrated supply chains, the trade back and forth between Canada and the U.S. and Mexico has been tremendously beneficial."

Mr. Trudeau's meeting with the U.S. executives came after U.S. Commerce Secretary Wilbur Ross accused the Prime Minister of using a speech at the World Economic Forum on Tuesday to apply pressure on the United States in the North American free-trade agreement talks. The Prime Minister told the Davos gathering that the Trans-Pacific Partnership was a "right deal" for Canada and he was "working very hard" to convince Mr. Trump about the merits of NAFTA.

Mr. Ross told reporters after he arrived in Davos that Mr. Trudeau's speech was designed "to put a little pressure on the U.S. in the NAFTA talks."

McKinsey & Co. managing director Dominic Barton, who heads Mr. Trudeau's economic advisory council, chaired the roundtable that included executives such as BlackRock CEO Larry Fink, New York Stock Exchange president Tom Farley and Andrew Liveris, chair of Dow Chemical.

He said the U.S. executives told the Prime Minister that they would make sure their workers understood what was at stake if NAFTA is killed.

"What was talked was about the importance of NAFTA for everyone and people were talking very specifically about the jobs that were created or the jobs that could be lost … and people need to talk to their employees about this just so there is an awareness," Mr. Barton said.

David Abney, chair of UPS, said NAFTA has created millions of jobs in the U.S., Canada and Mexico. He expressed hope that NAFTA negotiators can manage to get a deal to reform the treaty.

Despite warnings from the Bank of Canada that global investors are holding back on putting money into Canada because of uncertainty over NAFTA, Mr. Abney said his multinational courier service will continue to invest in Canada no matter what happens.

The Prime Minister, who is spending three days at a ritzy ski resort in Davos, will not meet President Trump, who arrives Thursday morning.

He has, however, used every occasion to hold private meetings with U.S. executives as well as world leaders including German Chancellor Angela Merkel and Israeli Prime Minister Benjamin Netanyahu.

John Negroponte, who was the U.S. ambassador to Mexico when NAFTA was negotiated and later served as President George W. Bush's national intelligence director, had high praise for the Trudeau government's "civility" in its handling of the NAFTA talks.

"I worry a lot about NAFTA. It is critical that it stay in effect and not be abandoned by the President," Mr. Negroponte told The Globe and Mail. "There have been a number of negative things said on our side that I think could have sparked some kind of spontaneous reaction from our negotiating partners but so far there has been considerable civility notwithstanding the seriousness of the problem."

The Prime Minister has been criticized by the opposition parties for travelling to the Davos gathering of billionaires, bankers, celebrities and world leaders. He is staying at the Ameron Swiss Mountain Hotel, where a hamburger plate costs $75.

John Manley, head of the Business Council of Canada, defended Mr. Trudeau's stay-over in Davos, saying it's a rare opportunity to meet a lot of major corporate executives in a short period of time.

Many of the executives with major investments in Canada and Mexico almost certainly share Mr. Trudeau's view that NAFTA is too important to be torn up as the President has threatened to do, he said.

"It is going to be hard to find somebody in Davos who thinks that Donald Trump is on the right track in tearing up NAFTA," Mr. Manley said. "I think people are willing to be less inclined to believe that Donald Trump will actually abrogate NAFTA."

Given Mr. Trump's tough talk on NAFTA, opposition to the Trans-Pacific Partnership and recent protectionist actions undertaken in recent months, it is unclear how warmly he will be received among the global elite in Davos.

The President plans to tout an America First trade agenda in a major speech on Friday. On Thursday, he will "host a small dinner with select European companies to share our economic success story, and to encourage them to continue to invest in America," Gary Cohn, head of the White House National Economic Council, said Tuesday.

At the forum, "President Trump will reiterate that a prosperous America benefits the world," Mr. Cohn said. "The President will continue to promote fair economic competition, and will make it clear that there cannot be free and open trade if countries are not held accountable to the rules."

With files from The Associated Press.

THE GLOBE AND MAIL. JANUARY 24, 2018. WORLD ECONOMIC FORUM. What is Davos, and what are Trudeau and Trump doing there? A guide to the summit so far. This week, globalization's fiercest champions and critics are rubbing shoulders at a gathering of the world's business and political elite. Here's what you've missed, and what to expect

The latest

• Canada’s Prime Minister tried to reassure business leaders about NAFTA’s future on Wednesday as senior U.S. officials hit back at suggestions that President Donald Trump’s “America First” agenda was hurting globalization.
• Justin Trudeau is at the World Economic Forum in Davos, Switzerland. After a Wednesday roundtable with U.S. business leaders, he said they had a “great conversation” where he stressed the North American free-trade agreement was “tremendously beneficial” to all three countries and their citizens.
• At his keynote speech on Tuesday, Mr. Trudeau extolled the virtues of globalization and said Canada was working hard to convince the Trump administration of NAFTA’s merits. But he also vowed Canada would not slash taxes and regulations to compete with the United States, and warned the super-rich to put workers before profits.
• U.S. Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross were also in Davos Wednesday. At a press briefing, they defended aggressive U.S. trade actions and said more were to come. “America First does mean working with the rest of the world,” Mr. Mnuchin said. “It just means that President Trump is looking out for American workers and American interests no different than he expects other leaders would look out for their own.”
• Speaking about Mr. Trudeau’s Tuesday speech, Mr. Ross told reporters the Prime Minister’s remarks were designed “to put a little pressure on the U.S. in the NAFTA talks,” which are in their sixth round in Montreal this week. Mr. Ross, whose department has slapped punitive tariffs on Canadian softwood lumber and other products in recent months, also said “many countries are very good at the rhetoric of free trade but in fact actually practice extreme protectionism.”
• Mr. Ross and Mr. Mnuchin are part of a large U.S. delegation in Davos ahead of Mr. Trump’s arrival there on Thursday. He is expected to speak on Friday about his “America First” strategy and investment in the United States.

What's a Davos?

The summit: The World Economic Forum is a gathering in Davos, Switzerland, where the world's business and political elite gather to set the agenda for global commerce. The forum, an annual event since 1971, is the brainchild of German economist Klaus Schwab, who originally called it the European Management Forum. The theme of this year's event, which runs from Jan. 23-26, is "Creating a Shared Future in a Fractured World." In an interview with Associated Press, Mr. Schwab said he hoped the U.S. President's planned visit to Davos would "provide him even better with a global perspective," and said critics of the U.S. leader should hear him out. "Let's not forget he is the democratically elected president of the most powerful nation in the world."

Nation by nation: North America and Western Europe have a commanding presence at Davos, as far as the number of delegates is concerned. Mr. Trump's scheduled attendance is a rarity: The only other sitting U.S. president to go to the World Economic Forum was Bill Clinton in 2000.




Why it matters: The past few years have seen major backlashes against globalization, from the economic protectionism of Brexit and "America First" to anti-immigration policies in Europe and North America. Conflicts between globalization's champions and its critics, on both left and right, have played out in dramatic fashion at recent Davos summits. Last year, attendees heard an unlikely speech from Chinese President Xi Jinping, leader of a nominally communist country, defending free trade and comparing protectionism to "locking oneself in a dark room."

Trudeau's agenda

Easing fears about NAFTA: Mr. Trudeau told the Davos audience on Tuesday that Canada is working hard to make sure "our neighbour to the south" realizes that protecting NAFTA is in everyone's best interests. In a private round table on Wednesday, Mr. Trudeau told business leaders that he remains confident negotiators can update NAFTA and boost continental trade.

Hyping up the TPP: Mr. Trudeau's trip coincided with a major breakthrough on the Trans-Pacific Partnership, an 11-nation trade pact that was nearly killed last year when Mr. Trump withdrew the United States from it. At high-level talks in Tokyo on Tuesday, the countries agreed to new language for the deal, which they hoped to approve by March. In his Tuesday speech, Mr. Trudeau praised the TPP as "the right deal" for Canada. But back home, industry reaction to the revived TPP was mixed: Auto workers' unions decried the deal because it opens manufacturers up to low-cost competition and potential job losses; dairy farmers denounced it because it gives tariff-free access to Canada's protected market; but the group representing Canadian pig farmers hailed the pact for giving them more access abroad.

Talking the talk on gender equality: Mentioning the #MeToo and #TimesUp campaigns against sexual harassment, the Prime Minister spoke on Tuesday about the need to improve conditions for women in the workplace and acknowledge gender, race and other factors business practices for hiring, promotion and retention.

What he's not doing: Mr. Trudeau is not expected to meet with Mr. Trump in Davos.

Trump's agenda

'America First', but not so fast: Mr. Trump's Friday speech is expected to be a vigorous defence of the "America First" plan he outlined in his inauguration speech a year ago. But ahead of his arrival, the U.S. delegation at Davos – the biggest ever to come to the World Economic Forum – tried to soften the potentially fiery message by suggesting the Trump administration is still open to free trade as long as it serves Americans' interests. At a Wednesday news conference, Treasury Secretary Steven Mnuchin said strong U.S. growth was good for the world economy, and brushed off concerns about a tough reception from globalist critics among the elite Davos set: "We don't have to worry about this crowd."

Avoiding awkward encounters: Several in the Davos jet set are unlikely to give Mr. Trump a warm reception. The attendees include leaders of several African nations, which Mr. Trump allegedly denigrated in a meeting earlier this month. Also attending is Elton John, whose song Rocket Man inspired Mr. Trump's go-to epithet for North Korean leader Kim Jong-un. So is Cate Blanchett, who shaped chewing gum into a phallus on late-night TV to mock Mr. Trump just days after he took office.

What protesters are doing

Thousands of anti-capitalist protesters marched through Zurich on Tuesday to demonstrate against Mr. Trump's arrival at Davos later in the week. Bankers had been warned to stay clear of the approved demonstration, which unfolded peacefully.

More than 4,000 Swiss soldiers have deployed to guard Davos alongside 1,000 police, while a no-fly zone was put in place to protect delegates.

Associated Press and Globe staff, with a report from Reuters

REUTERS. JANUARY 24, 2018. U.S. defends America First agenda ahead of Trump visit to Davos
Paritosh Bansal

DAVOS, Switzerland (Reuters) - Senior U.S. officials hit back on Wednesday against suggestions that Donald Trump’s “America First” agenda was hurting globalization and trade, setting an aggressive tone ahead of the U.S. president’s visit to the World Economic Forum.

In keeping with Trump’s combative trade stance, U.S. Treasury Secretary Steven Mnuchin also welcomed a weaker U.S. dollar, helping to send the world’s reserve currency to a three-year low against a basket of major peers.

“Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told a press briefing at the annual summit in the Swiss ski resort of Davos.

World leaders, including Indian Prime Minister Narendra Modi, Canada’s Justin Trudeau and Brazilian President Michel Temer, raised concerns this week at the summit about growing protectionism, in remarks that delegates said seemed aimed at Trump’s policies.

German Chancellor Angela Merkel and French President Emmanuel Macron are also expected to speak later on Wednesday.

Under his America First agenda, Trump has threatened to withdraw from the North American free-trade agreement (NAFTA), disavowed the global climate change accord and criticized global institutions including the United Nations and NATO.

Trump is expected to arrive by Thursday and deliver a keynote address to the forum on Friday, mingling with the same elite “globalists” that he bashed during his 2016 presidential run.


Mnuchin and U.S. Commerce Secretary Wilbur Ross mounted a joint defence of Washington’s aggressive trade actions in Davos on Wednesday and said more were to come.

“This is about an America First agenda. But America First does mean working with the rest of the world,” Mnuchin said. “It just means that President Trump is looking out for American workers and American interests no different than he expects other leaders would look out for their own.”

Ross said U.S. trade actions were provoked by “inappropriate behaviour on the part of our trading counterparties.”

AMERICAN JOBS

On Tuesday, for example, the United States slapped steep import tariffs on washing machines and solar panels, in moves billed as a way to protect American jobs. China and South Korea condemned the tariffs, with Seoul set to complain to the World Trade Organization over the “excessive” move.

“Many countries are very good at the rhetoric of free trade but in fact actually practice extreme protectionism,” Ross said.

The slide in the dollar also helps U.S. exports, but Mnuchin noted: “Longer term the strength of the dollar is a reflection of the strength of the U.S. economy and the fact that it is and it continues to be the primary currency in terms of the reserve currency.”

Many in Davos worry that a brighter world economic outlook could darken if geopolitical threats - from protectionism and climate change to cyber attacks and war - gather pace in 2018.

Trump, the first sitting U.S. president to attend the forum since Bill Clinton in 2000, is a source of much of this anxiety after a volatile first year in office in which he has turned American foreign policy on its head.

The U.S. delegation is the largest ever to come to Davos, with 10 members of the Trump’s cabinet and senior White House staff, Mnuchin said. That includes Jared Kushner, Trump’s son-in-law and adviser.

When asked about a new agreement that is expected among 11 countries to forge an Asia-Pacific trade pact after the United States pulled out of an earlier version, Mnuchin said the Americans’ involvement was “not off the table”.

But he added, “We are fans of bilateral trading agreements.”

Earlier on Tuesday, Canada’s Trudeau called the new trade agreement, expected to be signed in Chile in March, the “right deal”.

Ross said Trudeau’s comments needed to be taken in the context of the latest round of talks on NAFTA. Perhaps there was some inclination to use that to “put pressure on the U.S. in the NAFTA talks,” Ross said.

Reporting by Paritosh Bansal; Editing by Mark Bendeich, William Maclean

BLOOMBERG. 24 January 2018. White House Declares Open Season on the Dollar at Davos
By Cecile Gutscher  and John Ainger

• Mnuchin casts greenback weakness as good for U.S. trade
• Treasury secretary echoes policy favored by Snow under Bush

Whether or not the White House choreographed the dollar’s slide to its lowest level in three years, the U.S. administration is certainly providing ammunition for those betting that the greenback will continue to weaken.

The U.S. currency is caught in the rhetorical cross hairs after Treasury Secretary Steven Mnuchin laid out the benefits of a weaker dollar for the American economy at Davos on Wednesday. The comments came days after U.S. President Donald Trump stepped up his protectionist push by slapping of tariffs on solar panels and washing machines. Subsequent remarks by Commerce Secretary Wilbur Ross that Mnuchin has not shifted America’s long-standing strong-dollar policy did little to slow the currency’s depreciation.



Mnuchin’s comments give “a green light to ongoing dollar weakness as far as the market is concerned,” said Shahab Jalinoos, global head of foreign-exchange trading strategy at Credit Suisse Group AG in New York. “As long as these kind of messages are presented it allows the market to imagine that’s what the administration wants to see. It validates the idea that further weakness is possible.”

Losses for the greenback have mounted since Trump’s inauguration a year ago, with the currency weakening against every Group-of-10 peer. That may have more to do with the vagaries of central-bank policy and interest rates and divisions in Washington than it does with Trumponomics. But whatever the reason, the administration’s acceptance of a weak dollar provides additional encouragement for bears.

“Obviously a weaker dollar is good for us as it relates to trade and opportunities,” Mnuchin told reporters in Davos. The currency’s short term value is “not a concern of ours at all,” he said.

Bloomberg’s dollar index slumped as much as 1 percent.

America’s Interest

Stuart Bennett, head of Group-of-10 currency strategy at Banco Santander SA, said the comments show the White House may be ready to use the currency as part of its trade agenda.

The remarks are “in line with protectionist headlines that we have had recently,” he said. “Given the market’s willingness to blindly sell the dollar, such comments only help.”

While Treasury secretaries since Robert Rubin in 1993 have tended to promote a “strong dollar” as being in America’s interest, most have tweaked the message from time to time, albeit perhaps not as aggressively as Mnuchin and sometimes more in error than design.

In 1997, Rubin noted the dollar had been robust “for some time now,” prompting a selloff. In 2001, Paul O’Neill told a German newspaper “we don’t follow, as is often said, a policy of a strong dollar,” before returning to the traditional rhetoric. His successor John Snow was more outspoken, saying in early 2003 that he wasn’t “particularly concerned” by a falling greenback and noting the benefits to exporters.

‘Bad Things Happen’

Mnuchin’s comments also appear to echo the sentiments of his boss. During his first year in office, Trump has expressed his displeasure with a lofty currency, telling the Wall Street Journal last year that “I like a dollar that’s not too strong” and adding that “lots of bad things happen with a strong dollar.”

“The forum and the context are crucial in sending a message that at a minimum, the U.S. views dollar weakness as benign and in the short term, potentially even favorable,” said Alan Ruskin, global co-head of foreign-exchange strategy at Deutsche Bank. “The dollar’s obviously been trading awfully to even what might be good news for some time now. It’s clear its more responsive anyway to negative news at this moment.”

— With assistance by Katherine Greifeld, Simon Kennedy, Brendan Murray, and Benjamin Purvis

INTERNATIONAL TRADE

Global Affairs Canada. January 24, 2018. Minister of International Trade launches web page to help Canadian businesses navigate trade barriers

Ottawa, Ontario - The Government of Canada is committed to helping Canadian businesses grow and to creating new opportunities for workers and businesses and well-paying middle-class jobs.

The Honourable François-Philippe Champagne, Minister of International Trade, today announced the launch of a new web page, called Register a trade barrier, for Canadian exporters dealing with trade barriers.

Through this new web page Canadian businesses can now register a trade barrier and then work with the Canadian Trade Commissioner Service and partner departments to address trade barriers affecting their exports or investments abroad.

Canadian businesses often face numerous challenges in doing business in new markets, including trade barriers, such as policies and regulations, that hinder trade in goods and services as well as investments. These might include excessive tariffs or labelling and local content requirements that are discriminatory or more burdensome than necessary.

Quotes

“Our government is committed to ensuring that Canadian businesses are able to access new markets with confidence and with support from Canada’s export agencies. The new trade barriers web page is another tool to assist Canadian exporters in dealing with the often challenging obstacles to trade that they face in those new markets.”

- François-Philippe Champagne, Minister of International Trade

Quick Facts

• Free trade agreements are an effective way to eliminate tariffs. For example, with the start of the provisional application of the Canada-European Union Comprehensive Economic and Trade Agreement on September 21, 2017, 98% of EU tariff lines became duty-free for goods.
• The Canadian Trade Commissioner Service provides support for Canadian businesses encountering barriers to trade in new markets.
• On January 23, 2018, Canada and the 10 other remaining members of the Trans-Pacific Partnership successfully concluded discussions on a new Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which will provide exporters and investors from all regions of Canada with new preferential market access to important markets in Asia-Pacific.

Register a trade barrier: http://www.international.gc.ca/gac-amc/campaign-campagne/trade_barriers-barrieres_commerciales/index.aspx?lang=eng
Canada tariff finder: https://www.tariffinder.ca/
Canadian Trade Commissioner Service: http://tradecommissioner.gc.ca/index.aspx?lang=eng

AVIATION

THE GLOBE AND MAIL. REUTERS. JANUARY 24, 2018. Key ruling in Bombardier-Boeing trade dispute delayed to Friday

MONTREAL, Jan 24 (Reuters) - The International Trade Commission (ITC) has postponed to Friday a key decision on whether duties should be slapped on American sales of Canadian plane-and-trainmaker Bombardier Inc's largest jet, the U.S. agency said on Wednesday.

The ITC moved the date of the ruling from Thursday to Friday because of the recent U.S. government shutdown, a spokeswoman for the agency wrote by email.

The ITC, which oversees U.S. trade remedy laws, will decide whether to support a U.S. Commerce Department recommendation to impose a duty of nearly 300 percent on sales of Bombardier's 110-to-130-seat CSeries to American carriers.

The case follows a petition by Boeing Co, the world's largest maker of jetliners, which said its business was hurt because Bombardier received illegal government subsidies and dumped the CSeries in the United States through the 2016 sale of 75 jets at "absurdly low prices" to Delta Air Lines.

Bombardier, which contests Boeing's claim, made a last-minute request on Tuesday for the ITC to consider Brazilian rival Embraer SA's new E190-E2 as a competitor in the 100-to-150-seat market because of recent improvements to the new plane's range.

The ITC considered only 100-to-150-seat jets with a range of 2,900 nautical miles or more as competitors to Boeing's 737 narrowbodies. While the CSeries was included as a competitor, the E190-E2, which will enter service this year and has around 100 seats, was excluded because it had a shorter range, Bombardier said in a letter to the ITC.

REUTERS. JANUARY 24, 2018. Air Baltic says likely to order Bombardier jets in coming months

DUBLIN (Reuters) - Latvia’s Air Baltic expects to buy more CSeries planes from Bombardier (BBDb.TO) in the coming months, a senior executive said on Wednesday.



The airline in October said it was in talks for a further 14 CS300 jets in addition to 20 already ordered.

“On top of the orders we have right now, most likely we will order more in the coming months,” Chief Financial Officer Vitolds Jakovlevs told the Air Finance conference in Dublin.

Reporting by Conor Humphries; editing by Jason Neely

REUTERS. JANUARY 23, 2018. Boeing completing 787-10 flight tests with GE engines
Jamie Freed

(Reuters) - Boeing Co (BA.N) has still to complete flight tests on the newly certified 787-10 Dreamliner with General Electric Co (GE.N) engines, but has finished tests with Rolls-Royce Holdings PLC (RR.L) engines, a Boeing executive said on Tuesday.

The U.S. jet manufacturer on Monday said the U.S. Federal Aviation Administration had certified the biggest model of the fuel-efficient Dreamliner for commercial use.

The first delivery, to Singapore Airlines Ltd (SIAL.SI) with Rolls-Royce engines, is due in the first half of the year and will be used on mid-length routes in the Asia Pacific region. United Airlines (UAL.N) is expected to accept the first 787-10 with GE engines in the second half of the year.

“We are complete with all flight testing required for the first deliveries to Singapore and the Rolls-Royce family,” Boeing 787 programme chief project engineer Bob Whittington told reporters on a conference call, speaking from Seattle.

“There is a little bit more testing to be done for the GE-powered airplanes a little bit later on.”

The 787-10 has 95 percent of its parts in common with the mid-sized Dreamliner, the 787-9. The main differences are in the environmental control system, which is larger due to the longer length of the airplane and higher number of passengers, and in the landing gear, Whittington said.

The smaller 787-8 model, the first Dreamliner, has roughly 80 percent commonality with the 787-10 and has been a slower seller as Boeing considers whether to launch a “New Mid-Sized Airplane” with 220-260 seats targeting the market between the 737 MAX 10 and the 787-8.



The 787-10 seats around 330 passengers and has a shorter range, at 6,430 nautical miles (11,910 kms), than the other Dreamliners, but Whittington did not rule out extending the range over time.

“We will continue to look and see if the market needs a couple of thousand more pounds take-off weight and we will continue those studies,” he said.

The 787-10 has received 171 firm orders from nine customers, the largest of which is Singapore Airlines. It is similar in size to the rival Airbus SE (AIR.PA) A350-900 model, which seats around 325 passengers but has a longer range.

Qatar Airways is expected to accept the first delivery of Airbus’s larger A350-1000 next month.

Reporting by Jamie Freed in Singapore; editing by Richard Pullin

ENERGY

The Globe and Mail. 24 Jan 2018. Calgary oil firm buying energy assets is backed by Chinese state
NATHAN VANDERKLIPPE, BEIJING
JEFF LEWIS, CALGARY

We can exchange goods with each other – this is good. Don’t be scared by this.

JIANG SHAN, FORMER LEAD OF ECONOMICS SECTION AT THE CHINESE EMBASSY IN CANADA

A Calgary oil company backed by China’s authoritarian Communist Party has emerged as a major buyer of distressed energy assets, prompting new concern over Canada’s push to explore free-trade talks with China.

Corporate documents show the Party has an ownership stake in little-known Shanghai Energy Corp., giving China’s political apparatus a financial interest in a key Canadian industrial sector.

The company is among a handful of Chinese entities that has pumped nearly $4-billion into Alberta’s oil and gas sector through the industry-wide downturn, ostensibly part of a new wave of private investment abroad. But an examination of Shanghai Energy’s opaque ownership structure by The Globe and Mail shows at least some of the dealmaking has previously unreported ties to Beijing.

The revelation comes at a time of heightened sensitivity over state companies buying up Canadian firms. Last week, a trio of Canadian construction companies urged Ottawa to block a takeover of Aecon Group Inc. by China Communications Construction Co., citing security concerns and the acquirer’s spotty record on safety and corruption.

Prime Minister Justin Trudeau has sought to forge a more expansive trading relationship with the world’s second-largest economy amid mounting uncertainty over the fate of NAFTA. But efforts to launch formal free-trade talks with China have stalled. In December, a source told The Globe that sticking points included the scope of negotiations as well as disagreements over labour and environmental standards.

The Chinese government has said its state-owned firms should be treated like private enterprises in any free-trade deal, but the party’s link to a Canadian energy company is a stark reminder of the competing interests inside Chinese acquirers, said Alicia Garcia-Herrero, chief economist for Asia Pacific at Natixis, a French corporate and investment bank.

Ms. Garcia-Herrero has served on the counsel to the executive board of the European Central Bank and last year co-authored a report titled How to handle state-owned enterprises in EU-China investment talks.

She said such firms must balance demands for profit with priorities such as: “How much can you help other Chinese companies? How much can you help China itself, or the Party?”

“The risk is real” that a Canada-China free-trade deal could bring more such state-run transactions, she said, unless Canada erects barriers to any company that does not operate in a market economy – “which basically means stop any purchase from China.”

Because “for China, the distinction between party, state, government or even actual business is inexistent.”

Under Canadian law, deals by state-owned entities are subject to stricter scrutiny than private corporations. Only in “exceptional circumstances” will a state-owned firm be allowed to acquire majority ownership in the oil sands, former prime minister Stephen Harper said in late 2012.

More recently, however, the Liberal government under Mr. Trudeau has said it welcomes investments from China, with Natural Resources Minister Jim Carr saying last June that Ottawa’s “minds are open.”

Chinese-controlled firms have a small share in the Canadian energy sector, which is overwhelmingly owned by companies headquartered in Calgary, Houston and Europe.

But Shanghai Energy and its affiliates have stepped up purchases of aging wells and other infrastructure as other sources of overseas capital have retreated.

The company is led by Wentao Yang, a China-born financier educated at the University of Calgary. Mr. Yang did not respond to phone and e-mail messages seeking comment. In an e-mailed statement last year, he called Shanghai Energy “a private Canadian company.”

But corporate documents in Canada and China show that the firm is a subsidiary of Shanghai Sinooil Energy Holding Corporation, which is, in turn, owned by China Energy Reserve and Chemicals Group, or CERCG.

CERCG is a state-owned firm with an unusual ownership structure.

According to the Chinese public corporate registry, it is currently owned by two companies: Zhongyuan Hang Ranqi and Beijing Zhongyou Sanhuan Technology Development Co., Ltd.

The former is wholly owned by China Hualian International Trading Company, which is, in turn, wholly owned by the International Department of the Central Committee of the Communist Party of China – which goes by the name “China Economic Cooperation Center.”

The latter, Beijing Zhongyou, is owned by Shanghai Guochu Nengyuan – which is itself owned by CERCG, a circular ownership structure.

A person who answered the phone at CERCG confirmed that the company is state-owned, but declined further comment, saying no one was available to answer other questions.

Direct control of corporations by the Communist Party is unusual in China, although the party wields unquestioned authority over China’s economic life. It also holds substantial influence in the private sector, through party committees inside companies – including foreign multinationals. Those committees have been buttressed in the past year as a way of ensuring the Party can maintain a grasp on entities outside its formal ownership.

Deals by Shanghai Energy and its affiliates have tended to fall below the threshold that would trigger a review under the Investment Canada Act.

Many involve assets burdened with major environmental liabilities that require costly remediation work or hefty deposits to be posted with Alberta’s Energy Regulator.

In 2016, the company scooped up oil and gas properties from bankrupt Endurance Energy Ltd.

The same year, Perpetual Energy Inc. sold unprofitable natural gas wells – including $133.6-million in future cleanup costs – to an unnamed buyer later identified by bankers as Sequoia Resources Corp.

Corporate registry filings list Mr. Yang as one of Sequoia’s directors. They also show the company is controlled by a numbered firm that shares a suburban address west of Calgary that at one time served as Shanghai Energy’s corporate headquarters.

Sequoia also picked up assets from bankrupt Waldron Energy Corp., according to court documents. Meanwhile, Husky Energy Inc. and Pengrowth Energy Corp. have, in recent months, transferred hundreds of well licences to yet another company called Sequoia Operating Corp.

A person familiar with the situation, who spoke on condition of anonymity because details of the transaction were private, said Pengrowth backers were the same group that bought assets from Perpetual Energy.

To be sure, it is not unusual for new companies to build up production by acquiring overlooked or distressed assets and redeveloping them over time. Indeed, the strategy could yield big gains as oil prices edge up.

“I don’t think they’re any different than any other acquirer,” said Bill Andrew, who led Long Run Exploration Ltd. as chief executive officer before it was bought in late 2015 by a unit of Shanghai-listed Changchun Sinoenergy Corp.

“They just happen to have a headquarters in Beijing, or Shanghai, or Hong Kong or wherever they’re coming from.”

One concern with Chinese state-owned acquirers is the risk they could seek to escape liability for aging sites by saying their government ownership means they are not subject to foreign law.

This comes at a time Alberta is already struggling with a spike in the number of abandoned oil and gas wells in the province following a string of corporate bankruptcies.

“What it very easily could lead to are these claims of sovereign immunity,” said Christopher Balding, a specialist in finance and economics at Peking University.

Several Chinese firms have made that argument in the United States, one after receiving a lawsuit about health problems related to Chinese-made drywall.

Others insist such fears are overblown and that Canada’s resources and China’s manufacturing prowess make for a tidy fit.

“We can exchange goods with each other – this is good. Don’t be scared by this,” urged Jiang Shan, who previously led the economics section at the Chinese embassy in Canada.

In contemplating free trade, “there are more advantages than disadvantages. If that’s the case we should go on,” he said. China’s ever-expanding economy and consumer demand are creating “lots of opportunities for Canada,” he added. “Don’t lose this opportunity.”

BLOOMBERG. 24 January 2018. Crude Breaks $65 as Record Drawdown Whittles U.S. Oil Stockpiles
By Jessica Summers

• American crude inventories dropped 1.07 million barrels: EIA
• 10th week of drop in stocks is longest stretch on record

Crude popped above $65 a barrel for the first time in more than three years after U.S. crude stockpiles fell for a 10th week in the longest stretch of declines on record.

Futures gained as much as 1.3 percent in New York. Crude in American tanks and terminals slipped last week to the lowest since February 2015 while inventories at the nation’s biggest storage also swung lower. Demand for stored supplies in the world’s biggest economy has been robust at a time of year when it’s usually weakening because of refinery repairs, all against the backdrop of production curbs by OPEC, Russia and other major suppliers.

“Demand is outpacing supply,” Brian Kessens, who helps manage $16 billion in energy assets at Tortoise Capital Advisors LLC, said by telephone. “The OPEC curtailments are helping and their compliance has been relatively strong.”



Oil hit the highest levels since 2014 in New York amid optimism over shrinking supplies in the U.S. and as a group of producing nations led by the Organization of Petroleum Exporting Countries and Russia showed unity on supply reductions through at least the end of this year.

West Texas Intermediate for March delivery jumped 63 cents to $65.10 a barrel at 11 a.m. on the New York Mercantile Exchange, the highest level since December 2014. Total volume traded was about 23 percent above the 100-day average.

Brent for March settlement climbed 39 cents to $70.23 on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $5.05 to WTI.

The Energy Information Administration on Wednesday said inventories at the key Cushing, Oklahoma, pipeline hub fell to the lowest level since January 2015, while gasoline stockpiles climbed for an 11th week and distillate stockpiles also increased.

“What the U.S refinery complex is seeing is really high demand for gasoline and diesel worldwide,” Kessens, said. The arbitrage “gives the U.S. an incentive to export refined products.”

Oil-market news:

• Saudi Arabia plans to link the most important tax paid by state-owned energy giant Aramco to the price of oil, a significant move ahead of the company’s initial public offering this year.
• Saudi Aramco’s trading unit started swapping the kingdom’s crude oil for products refined in other countries, allowing the company to tap new markets, according to its chief executive officer.

________________

LGCJ.: