CANADA ECONOMICS
WEF
Government of Canada. PM. January 25, 2018. Prime Minister concludes his participation at the World Economic Forum in Davos
Davos, Switzerland - The Prime Minister, Justin Trudeau, today wrapped up his participation at this year’s World Economic Forum (WEF) annual meeting.
At the WEF, the Prime Minister met with several world leaders and global business leaders to promote Canada as a partner of choice for trade and investment. The Prime Minister also participated in a roundtable with key U.S. industry leaders to discuss how we can strengthen trade between Canada and the U.S., and modernize NAFTA to the benefit of the middle class in North America.
During his keynote address, the Prime Minister underscored the importance of women’s economic empowerment. He noted that much of the economic and labour force growth in the last decades is because of more women entering into – and changing – the workforce. He also highlighted how organizations with women in key leadership positions perform better than those without, and that everyone benefits when women can participate more freely and fully in the workplace.
The Prime Minister also took part in a panel discussion with Malala Yousafzai on girls’ education. He underscored the importance of education and how it breaks down barriers, empowers women and girls, and gives them more opportunities to prosper.
Before the panel discussion, the Prime Minister announced Canada’s pledge of $180 million to the Global Partnership for Education (GPE) for 2018-2020. This pledge represents a doubling of Canada’s annual contribution to the GPE, and will help strengthen education systems in developing countries while providing targeted support for girls’ education.
The Prime Minister also chaired a roundtable discussion on oceans, where he highlighted Canada’s ambitious Oceans Protection Plan, and emphasized the importance of taking coordinated global action to protect the health of our oceans.
Quote
“It’s time to close the gender gap in our workplaces. The hiring, promotion, and retention of women is something we can make happen today – and it’s up to all of us, especially those in positions of leadership, to make sure women have the opportunities they need to influence change and realize their potential.”
— Rt. Hon. Justin Trudeau, Prime Minister of Canada
Quick facts
- During his keynote address, the Prime Minister also announced that Canada and the ten other remaining members of the Trans-Pacific Partnership concluded discussions on a new Comprehensive and Progressive Agreement for the Trans-Pacific Partnership (CPTPP).
- The Prime Minister also highlighted the agenda and priorities that will guide Canada’s G7 presidency, and announced that the co-chairs for the G7 Gender Equality Advisory Council will be Melinda Gates and Isabelle Hudon.
- The Global Partnership for Education Replenishment Conference will take place February 1 and 2, 2018, in Dakar, Senegal. Canada is among the top 10 donors to the GPE, an organization which Canada helped to launch in 2002.
- The Prime Minister met with several world leaders, including: President of Argentina Mauricio Macri; Chancellor of Germany Angela Merkel; Prime Minister of India Narendra Modi; Prime Minister of Israel Benjamin Netanyahu; and Prime Minister of Italy Paolo Gentiloni.
- Since mid-2016, Canada’s economy has grown on average by 3.6% over previous years.
- Canada has implemented a series of actions such as the Global Skills Strategy to develop and attract talent and the Canada Infrastructure Bank to invest in and support innovation and infrastructure.
- The World Economic Forum brings together the world’s private, public, and civil society leaders in collaborative activities focused on shaping global, regional, and industry agendas.
World Economic Forum annual meeting: https://www.weforum.
Prime Minister announces funding for the Global Partnership for Education: https://pm.gc.ca/
Prime Minister keynote speech at the World Economic Forum 2018: https://pm.gc.ca/eng/
THE GLOBE AND MAIL. JANUARY 25, 2018. Trudeau defends decision to not seek meeting with Trump in Davos
ROBERT FIFE, OTTAWA BUREAU CHIEF
DAVOS, SWITZERLAND - Prime Minister Justin Trudeau says he didn't seek a one-on-one meeting with Donald Trump at the World Economic Forum in Davos to allow other world leaders an opportunity to press their issues with the U.S. President.
Mr. Trump – the first U.S. President in nearly 20 years to attend the annual gathering of the wealthy and powerful held in the Swiss Alps – arrived Thursday with a mission to espouse his America First trade policy that has impacted Canada and the world.
Despite U.S. duties on softwood lumber and Bombardier jets and uncertainty over negotiations on the North American free-trade agreement, Mr. Trudeau said it wasn't necessary for him to seek out Mr. Trump and top U.S. cabinet secretaries accompanying him.
"People know that I have many opportunities to exchange on a regular basis with the President. We talk on the phone. We see each other at a broad range of international and local venues," Mr. Trudeau told a wrap-up news conference in Davos. "When we are in Europe, each of us is focused on seeing the folks we don't see really often enough."
The Prime Minister's Office said Mr. Trudeau's last phone call with President Trump was on Oct. 16 and his last in-person meeting was on Oct. 11 in Washington. However, the PMO pointed out the two leaders have had 17 interactions since Mr. Trump won the election.
Arriving in Davos on Thursday, Mr. Trump said he brought a message of "peace and prosperity." He held separate meetings with Israeli Prime Minister Benjamin Netanyahu and British Prime Minister Theresa May.
Mr. Trump said that talks with Britain would result in a "tremendous increase" in trade and that the two countries were on the "same wavelength in every respect."
Mr. Trudeau – who met leaders of Germany, Italy, Israel, Argentina and India during his three days in Davos – left Thursday night and will miss President Trump's keynote address on Friday to a global economic elite that tends to favour free trade.
"I think the opportunity to convene different perspectives at this conference is really important and, like everyone, I look forward to hearing what the President has to say in his speech," he said.
In contrast to the U.S. President, who has pulled back from international agreements such as the Trans Pacific Partnership, the Prime Minister has emphasized global commerce and the importance of NAFTA during his three days in Davos. (Canada and 10 other countries agreed earlier this week to a revised version of the TPP that does not include the United States.)
U.S. Commerce Secretary Wilbur Ross criticized Mr. Trudeau on Wednesday for using the platform of the World Economic Forum to "put pressure" on the U.S. in its NAFTA negotiations.
But Mr. Trudeau denied he was causing trouble for the Trump administration.
"I have been very consistent in talking about NAFTA – that it is a good deal for Canada, for the United States," he said. "It has created millions of jobs on both sides of the border and in Mexico over years and it has created economic growth that has been remarkable."
The Prime Minister spent most of time lobbying U.S. corporate chief executives to help him sell the benefits of NAFTA to American workers and urging them to keep investing in Canada.
"Overall, I am pleased with the progress made in this summit," Mr. Trudeau told reporters as he also reiterated the stand he took against corporate greed in his Tuesday speech to corporate heavy hitters, bankers and NGOs.
"Many employers continue to put the pursuit of profits ahead of the well-being of their employees," he told reporters. "We simply cannot afford to let this kind of thinking continue to dictate corporate behaviour."
However, Mr. Trudeau appeared to be caught off guard when reporters asked what Ottawa is doing to help Sears Canada workers and pensioners, who lost their pension when the company went bankrupt even though Sears's top executives received huge bonuses.
"Obviously there is a significant amount of compassion we have for people who face layoffs, who are put in a difficult situation like this," he said, but admitted there is not much he can do for them.
"That is why Canada has measures like the Canada Pension Plan, like the EI [employment insurance] …for people who are facing unexpected downturns or layoffs like what happened with Sears Canada," he said.
With a file from Reuters.
Government of Canada. PM. January 25, 2018. Prime Minister announces funding for the Global Partnership for Education
Davos, Switzerland - A more peaceful and prosperous world starts with a quality basic education. That is why the Government of Canada, as part of its Feminist International Assistance Policy, is committed to investing in education around the world, especially for girls.
Today, at the World Economic Forum’s annual general meeting in Davos, Switzerland, Prime Minister Justin Trudeau announced that the Government of Canada will provide $180 million to the Global Partnership for Education (GPE) for 2018-2020. This pledge, a doubling of Canada’s current annual contribution to the GPE, will provide targeted support for girls’ education and help strengthen education systems in developing countries.
Canada has been a long standing supporter of the GPE’s development assistance, which helps children – especially the poorest, most vulnerable, and those living in fragile or conflict-affected countries – receive a quality basic education.
Canada’s investments help establish strong education systems that provide children and youth, particularly girls, with ten years of quality basic education. Our investments also help ensure that youth and adults, especially young women, have the knowledge and skills they need to secure a job and realize their full potential.
Quote
“Canada is committed to making sure young people around the world, especially girls, get the education they deserve. A quality basic education is one of the most important things we can do for children, and the path forward to a more gender equal, peaceful, prosperous world.”
—The Rt. Hon. Justin Trudeau, Prime Minister of Canada
Quick Facts
- For the 2011-2014 and 2015-2018 periods, Canada’s contribution to the GPE was $57.6 million and $120 million, respectively.
- Canada was a founding member of the GPE’s predecessor, the Education for All - Fast Track Initiative, which built support among G7 donors during Canada’s 2002 Kananaskis Presidency.
- Multilaterally, Canada is the 10th largest bilateral donor to the GPE.
- Sixty-four per cent of the GPE’s partner countries had as many girls as boys completing primary school in 2015.
- With the pledges received during the 2018-2020 period, the GPE aims to help 19 million additional children to complete primary school, including 9.4 million girls and over 10.8 million children in countries affected by fragility or conflict; and, help 6.6 million additional children to complete lower secondary school, including 3.9 million girls and 3.9 million children in countries affected by fragility and conflict.
Global Partnership for Education: https://www.
Education in developing countries: http://
THE GLOBE AND MAIL. JANUARY 25, 2018. Trudeau announces Canada doubling money for girls’ education fund at Davos
ROBERT FIFE, OTTAWA BUREAU CHIEF
DAVOS - Prime Minister Justin Trudeau used the stage at the World Economic Forum to announce that Canada is doubling the money it gives to an international fund that helps educate girls in developing countries.
During a panel discussion on women's empowerment on Thursday, alongside Pakistani Nobel Peace Prize winner Malala Yousafzai, the Prime Minister said Canada will provide an additional $180-million to the Global Partnership Education Fund (GPE) in 2018-2021.
"Canada is committed to making sure young people around the world, especially girls, get an education," Mr. Trudeau told the gathering. "Empowering women through education is an essential pathway toward success."
Ms. Yousafzai, who is an honorary Canadian citizen, had urged Canada to take a global lead on educating girls in a speech to Parliament last year.
"On behalf of 130 million girls, thank you," Ms. Yousafzia told Mr. Trudeau as she spoke about the challenges of educating girls and young women in countries where they are not regarded as full citizens.
In Afghanistan, for example, there is a demand for female teachers, because mothers will not send their girls to schools where men teach, she said. Meanwhile, technical educators are needed in Lebanon, which has been flooded with Syrian refugees.
The activist spoke of the passion that she has witnessed in girls who have been given an opportunity to go to school, recounting an incident last week with a Syrian refugee in Lebanon.
"One girl said she wants to be an architect and I asked 'why?' " Ms. Yousafzia said. "And that girl said she wants to be an architect because the day she left Syria, she saw her country destroyed, and that day she decided to become an architect so one day she [could] rebuild her country."
Ms. Yousafzai gained global attention for becoming the youngest Nobel Peace Prize winner in history in 2014. She survived a gunshot to the head from the Taliban in 2012 because she had advocated for girls education in Pakistan.
Since the attack, Ms. Yousafzai has used the star power of the Nobel Peace Prize to campaign for female education.
She set up the the Malala Fund in 2013, which helps girls in struggling countries access "free, safe and quality education," and contributes to the Global Education Fund.
Ms. Yousafzai said empowerment is only possible through education, and that she hopes other countries will follow the steps Canada is taking.
NGOS such as World Visions, Results Canada and Global Citizen applauded the Trudeau government for doubling Canadian funding for GPE. The agency partners with countries to provide quality education to about 870 million children around the world.
"Canada's commitment to global education today is a very important step towards preventing a lost generation of children – especially girls – caught up in the conflict and uncertainty," said World Vision policy vice-president Jamie McIntosh.
Canada is the 10th largest donor to the GPE, which was founded at the G8 leaders' summit hosted by former Liberal prime minister Jean Chrétien in 2002.
Mr. Trudeau, who returns to Canada Thursday evening, pledged to make gender equality a major focus of the upcoming G7 leaders' summit in Charlevoix, Que.
On Tuesday in a keynote speech to the World Economic Forum, Mr. Trudeau announced that Melinda Gates and Canadian ambassador to France Isabelle Hudon will serve as co-chairs of the G7 Gender Equality Advisory Council.
"Everything the G7 does, all the meetings, all the commitments, all the initiatives that we partner in this year and hopefully into the future has a gender lens," Mr. Trudeau said. "Everything will be looked at in how it respects, empowers and enables women to be more successful."
The Prime Minister, who has been at the chic resort of Davos for three days, has spent most of his time lobbying U.S. corporate heavy hitters to defend NAFTA and to keep investing in Canada, despite President Trump's threat to scrap the continental treaty.
Mr. Trudeau, German Chancellor Angela Merkel and Indian Prime Minister Narendra Modi have used their keynote speeches at the gathering of the global elite to champion free trade and to warn of the dangers of protectionism.
NAFTA
The Globe and Mail. 25 Jan 2018. U.S. trade advisers single out Trudeau over NAFTA tactics. In Davos, Trump’s economic team argue the Prime Minister’s praise of ‘progressive’ trade is intended to increase pressure during negotiations
ROBERT FIFE, OTTAWA BUREAU CHIEF
DAVOS, SWITZERLAND - On the eve of Donald Trump’s arrival in the Swiss Alps for the World Economic Forum, the U.S. President’s top economic advisers gave a robust defence of his “America First” trade agenda, including taking a shot at Prime Minister Justin Trudeau’s handling of North American free-trade negotiations.
Treasury Secretary Steven Mnuchin and Commerce Secretary Wilbur Ross set the stage for the President’s protectionist message in Davos on Wednesday, with Mr. Mnuchin saying the administration’s aggressive trade action is aimed at “looking out for American workers and American interests.”
Mr. Ross, a hardliner on trade, singled out Mr. Trudeau after he hailed the new 11-country Trans-Pacific Partnership trade agreement as the “right deal” for Canada and for those who believe in “progressive trade.”
Mr. Ross told U.S. reporters Mr. Trudeau was using the Davos forum of bankers and corporate chief executives to “put pressure on the U.S. in the NAFTA talks.”
The Prime Minister’s Office responded that Mr. Trudeau is a champion of progressive trade, while Finance Minister Bill Morneau dismissed the Commerce Secretary’s criticism as the usual back-and-forth of trade talks.
“What I can say with NAFTA is that negotiations are tough,” Mr. Morneau told reporters. “We are in the middle of a negotiation where we are trying to make sure that we improve NAFTA for Canadians and we should expect there will be challenges.”
Mr. Ross later told CNBC that there is a “good chance” a deal on NAFTA can happen, but added “the President made it clear if it is not a deal that he likes, he won’t do it.” Mr. Trump pulled the United States out of the original TPP deal and launched talks to revamp the North American free-trade agreement as part of his protectionist agenda that has included heavy duties on Canadian softwood lumber and Bombardier jets.
Mr. Trudeau, German Chancellor Angela Merkel and Indian Prime Minister Narendra Modi have used their keynote speeches at the gathering of the global elite to champion free trade and to warn of the dangers of protectionism.
In his remarks on Tuesday, Mr. Trudeau was applauded for saying “we are working very hard to make sure our neighbour to the south recognizes how good NAFTA is and has benefited not just our economy, but his [Mr. Trump’s] economy and the world’s economy.”
The Prime Minister, who is spending three days at the ritzy ski resort of Davos, will leave late on Thursday and miss Mr. Trump’s keynote speech, in which the President is expected to defend his trade policies.
On Wednesday, Mr. Trudeau held a private roundtable with executives from Dow Chemical, UPS, the New York Stock Exchange, Tyson Foods, Cargill, Qualcomm Inc. and global investment firm Blackrock.
“We just had a great conversation about all the jobs in Canada and the United States that rely on NAFTA,” Mr. Trudeau later told reporters. “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.”
McKinsey and Co. managing director Dominic Barton, who heads Mr. Trudeau’s economic advisory council, chaired the roundtable. He said the CEOs were committed to make sure their work force understood what was at stake if NAFTA were to die.
David Abney, CEO of UPS, said NAFTA has created millions of jobs in the United States, Canada and Mexico. He expressed hope that NAFTA negotiators can manage to reach 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.
John Negroponte, who was the U.S. ambassador to Mexico when NAFTA was originally negotiated and later served as president George W. Bush’s national intelligence director, praised 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, celebrities and world leaders. He is staying at the Ameron Swiss Mountain Hotel, where a hamburger platter costs $75.
But John Manley, head of the Business Council of Canada, defended Mr. Trudeau’s trip to Davos, calling it a rare opportunity to meet a lot of multinational 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, Mr. Manley said.
Mr. Trudeau met with Israeli Prime Minister Benjamin Netanyahu on Wednesday, but his office did not tell Canadian journalists until after it was later revealed by Israeli media. The Trudeau-Netanyahu discussion comes weeks after Canada abstained from voting on a United Nations resolution condemning a controversial U.S. decision to relocate its embassy from Tel Aviv to Jerusalem.
The Globe and Mail. 25 Jan 2018. At Montreal talks, Ottawa proposes new approach to breaking NAFTA auto gridlock. Autos: Canadian proposals being presented as ideas for discussion, not formal counteroffers
ADRIAN MORROW, MONTREAL
The Canadian method would ensure such things as software development count toward the content requirement.
Canadian negotiators have begun presenting proposals to jack up the amount of North American content in vehicles made in the NAFTA zone, in a bid to reach a deal with the United States on one of the key sticking points in the overhaul of the continental trade pact.
And Ottawa has joined with Mexico City to pitch a series of “periodic reviews” of the North American free-trade agreement as an alternative to the U.S. demand that the pact be subjected to a “sunset clause” that would automatically terminate the deal in five years unless all three countries agreed to extend it.
These discussions on potential compromises unfolded at the sixth round of NAFTA talks in Montreal on Wednesday, said three sources with knowledge of the confidential negotiations.
Canada is hoping that by suggesting ideas to boost the amount of North American content in cars and trucks, it can persuade the United States to drop its demand that all vehicles made in Canada and Mexico contain at least 50 per cent U.S.made content. Discussions on the so-called “rules of origin” that govern content in products traded between NAFTA countries are scheduled to run through Friday, according to a schedule obtained by The Globe and Mail.
The auto proposal represents the Trudeau government’s most serious attempt so far to break the impasse over the Trump administration’s protectionist NAFTA demands.
But it is far from clear Washington will soften its stand. Observers warn Canada and Mexico’s decision this week to enter a new free-trade deal with Asian countries – a pact that contains less stringent auto content rules than NAFTA – complicates their efforts to placate the United States and reach an agreement.
As The Globe revealed earlier this month, Canada’s auto proposal would calculate the percentage of required North American content on the total value of a vehicle. The current system instead uses a list of which content counts toward the requirement. The Canadian method would ensure such things as software development count toward the content requirement, because the current list does not include many high-tech auto components developed after NAFTA’s signing in 1994.
The United States is demanding the amount of required NAFTA-zone content be raised to 85 per cent from 62.5 per cent. One source said Canada will not be presenting proposed percentages, but only focusing on the calculation method.
The Canadian proposals are being presented as ideas for discussion and not as formal counteroffers, allowing Ottawa to suss out Washington’s willingness to compromise without making any formal concessions.
Flavio Volpe, president of Canada’s Automotive Parts Manufacturers’ Association, said he thought the United States would find something to like in the Canadian pitch. As the tech sector becomes an increasingly large part of the auto industry – given the rise of self-driving cars – Mr. Volpe said these proposals will help keep future jobs from moving to China.
“I’m optimistic … a real sense of potential optimism that we can have a good discussion, we can come up with good commercial movement,” he said outside the talks.
Mr. Volpe, however, argued Canada and Mexico had undermined the negotiations by signing on to a revived Trans-Pacific partnership a day earlier. “In TPP, we opened a back door for nine other countries at a 45-percent content level [for vehicles made in the TPP zone].
“If you only have to count 45 per cent, it means the other 55 can come from Mars,” he said.
U.S. Commerce Secretary Wilbur Ross earlier in the day told MSNBC he wanted to make hightech components count toward the content requirement. “Those rules are at best archaic and at worst, we don’t feel they accomplish the purpose they were intended to, which was to facilitate production within NAFTA,” he said in Davos, Switzerland.
Daniel Ujczo, an international trade lawyer in the Columbus, Ohio, office of Dickinson Wright, said Canada’s pitch could be the starting point for a deal. But to convince Washington to back off its U.S. content requirement, Ottawa and Mexico City will have to alleviate its fears that TPP will lead Asian auto parts to pour into the United States.
“I think this is a good first step. I just don’t know how you get past it and get rid of the 50 per cent,” Mr. Ujczo said in an interview.
“They have to show the U.S. how they’re going to bolt the back door.”
Working in Canada’s favour is extensive pro-NAFTA lobbying by U.S. business, including the American auto industry.
In a letter this week to U.S. Trade Representative Robert Lighthizer, the Motor & Equipment Manufacturers Association said a new NAFTA should “include research and development, engineering and designing, and software development expenditures in regional value content calculations.”
The United States’ proposed sunset clause is another barrier in the renegotiation. Canada and Mexico instead favour a process under which the NAFTA countries can regularly review the pact and make changes, but without the threat of the deal terminating if the three parties fail to agree.
THE GLOBE AND MAIL. JANUARY 25, 2018. TRADE. Canadian proposal to break auto deadlock in NAFTA talks has merit: Fiat Chrysler CEO
GREG KEENAN AND ADRIAN MORROW
TORONTO AND MONTREAL - Canada's proposals designed to break the deadlock on automotive issues in the NAFTA talks have merit, Fiat Chrysler Automobiles NV chief executive officer Sergio Marchionne says.
"Within the structure proposed by the Canadians, there appears to be the beginning of a solution to this problem," Mr. Marchionne said Thursday on the auto maker's year-end financial results conference call.
"The concept embedded in the Canadian proposal is defensible," he told industry analysts. "This whole notion of moving away from some of the antiquated terms that we used in NAFTA back in the '90s is a good thing."
Canadian and Mexican negotiators are trying to move the Americans off their insistence that the vehicles contain 85 per cent North American content in order to qualify for duty-free shipment in the free trade zone and that vehicles assembled in Canada and Mexico contain at least 50 per cent U.S. content if they are going to be imported to the U.S. market.
The Canadian concepts involve changing the way North American content is counted in vehicles to include such areas as investment, research and development and new technology that will become more commonplace as the auto industry develops self-driving vehicles.
Mr. Marchionne noted on the call, however, that "it's very difficult for us to tell you whether this thing is going to be successful or not."
He said the U.S. administration has been trying to get vehicle assembly and parts production repatriated back to the United States.
Fiat Chrysler's move to shift production of heavy-duty pickup trucks to a plant in Michigan from a plant in Mexico should help, he noted.
"We've done a lot, because I think we are adding up to 9,000 jobs back into Michigan and having the new Mexican asset dedicated to something else is part of the solution."
He cautioned that much negotiating remains to be done by the three countries, whose teams are meeting in Montreal this week in the sixth round of talks after the U.S. government said last year it wanted to reopen the deal.
Canada's chief negotiator, Steve Verheul, said Thursday afternoon that Canada's auto pitch went "reasonably well," but said talks were continuing.
"I think it went reasonably well. There's a lot more thinking to do, a lot more discussions," he told reporters at the Hotel Bonaventure in Montreal. "The mood is still reasonably constructive."
Mr. Verheul said American negotiators had "some positive things to say about" Canada's proposal to have NAFTA subject to periodic review – during which the countries could agree to changes to the pact -- as an alternative to the American demand that it contain a sunset clause that would automatically terminate the deal in five years unless all three countries agreed to keep it going.
And he confirmed Canada had made a pitch on reforming Chapter 11, the portion of the deal that allows corporations to sue governments and which the U.S. wants to make voluntary.
One source with knowledge of the talks said discussion of the auto proposal was still going Thursday, and it was too soon for Canada to know for certain whether the U.S. liked Canada's ideas.
REUTERS. JANUARY 25, 2018. NAFTA negotiations grind on, little sign of quick breakthrough
Anthony Esposito, David Ljunggren
MONTREAL (Reuters) - U.S. negotiators are holding firm in their demands for a wide-ranging overhaul of NAFTA, sources close to the talks said on Thursday, raising questions about whether any real movement is happening at the latest round of negotiations on the treaty.
Officials from Canada, Mexico and the United States are in Montreal for the sixth and penultimate set of talks on the North American Free Trade Agreement. Major differences remain to be settled ahead of the end-March deadline.
“We have brought flexibility, we have brought ideas, but the problem is that the United States has not moved an inch. They say, ‘It is my proposal or nothing’,” said one of the sources, who spoke to reporters on condition they not be named.
The administration of U.S. President Donald Trump, which has repeatedly threatened to walk away from the 1994 pact, wants more North American content in autos and is pressing for a sunset clause that would allow one party to pull out of the treaty after five years.
Trump, who has made contradictory comments about the 1994 treaty in recent weeks, told CNBC, “NAFTA’s a horrible deal, we’re renegotiating it. I may terminate NAFTA, I may not - we’ll see what happens.”
On Wednesday, Canadian negotiators unveiled what were termed “creative ideas” to address U.S. demands for a sunset clause and higher auto content.
Canadian chief negotiator Steve Verheul - describing the mood at the talks as “still reasonably constructive” - said the U.S. side would be taking the auto proposals back to Washington.
“I think it went reasonably well. There is a lot more thinking to do,” he told reporters on Thursday.
Trade groups representing automakers and auto parts manufacturers say the U.S. demands for higher content would make the region’s car industry uncompetitive.
Canada suggests North American content would be higher if the value of software and other high-tech equipment made on the continent were taken into account.
Fiat Chrysler Automobiles NV
19.42
FCHA.MIMILAN STOCK EXCHANGE
-0.02(-0.10%)
Fiat Chrysler Automobiles NV (FCHA.MI) Chief Executive Officer Sergio Marchionne told an earnings call on Thursday that “there appears to be the beginning of a solution to this problem. ... The concept embedded in the Canadian proposal is defensible.”
Senior Canadian and Mexican officials, who met at the World Economic Forum in Davos, also struck a more upbeat note on Thursday.
Canadian Foreign Minister Chrystia Freeland said nobody was expecting a deal to be struck in the current round of talks. Mexican Economy Minister Ildefonso Guajardo said the attempt to find creative solutions on NAFTA was in a much better place than a year ago.
Guajardo said negotiators needed to listen to what Trump had promised to achieve in NAFTA reform, and try to interpret that in a way that did as little damage as possible.
Uncertainly over NAFTA’s future is weighing on some North American markets and policymakers. Bank of Canada Governor Stephen Poloz told CNBC on Thursday that NAFTA is the “number one” thing that keeps him up at night.
Additional reportinng by Tom Miles in Davos and Andrea Hopkins in Ottawa and Nick Carey in Detroit; Editing by David Gregorio and Jonathan Oatis
REUTERS. JANUARY 25, 2018. U.S., Mexico unions file NAFTA labor complaint to influence talks
David Lawder
MONTREAL (Reuters) - U.S. and Mexican unions formally complained to the U.S. Labor Department on Thursday that Mexico continues to violate NAFTA’s weak labor standards, a move that they hope will persuade U.S. negotiators to push for stronger rules.
The AFL-CIO told Reuters that it and Mexico’s UNT were filing the complaint with the U.S. office that oversees the labor accord attached to the North American Free Trade Agreement as U.S., Canadian, and Mexican negotiators met in Montreal to try to modernize the 1994 trade pact.
The complaint argues that Mexico’s proposed labor law amendments to implement constitutional reforms will violate the North American Agreement on Labor Cooperation. It seeks efforts from the United States to prevent the measures from being implemented and to demand changes to bring Mexico into compliance.
“Simply by promoting this bill, which aims to undermine the constitutional reforms, the government of Mexico brazenly violates the central obligations of the NAALC - namely to ‘provide high labor standards’ and to ‘strive to improve those standards,'” the AFL-CIO and Mexico’s UNT National Workers Union said in the complaint.
Talks to overhaul the trade deal have been dogged by U.S. President Donald Trump’s repeated threats to withdraw from the pact. Despite some optimism over new “creative ideas” from Canada on autos trade issues, the three countries are far from a deal as a March deadline draws near.
A key complaint is that NAFTA has failed to lift chronically low Mexican wages that have steadily drawn U.S. and Canadian factories and jobs to Mexico by allowing companies there to thwart unionization. Lower health and safety standards also persist in Mexican factories.
AFL-CIO President Richard Trumka said in a statement that Mexico’s non-compliance with even its 1994 labor obligations shows that NAFTA is ”a failure.”“Mexico’s low-wage, low-rights economy keeps wages down in all three countries and has failed to develop Mexico as a larger market for U.S. exports,” Trumka added.
The U.S. Trade Representative’s office has made steep demands on automotive content to reverse job migration, but its labor proposals have disappointed unions and many Democratic Party lawmakers. The proposals have stuck largely to language that Mexico and Canada previously agreed to in the Trans-Pacific Partnership, a trade deal the Trump administration has abandoned.
“What the USTR put on the table is not acceptable and won’t get the job done,” said Celeste Drake, the AFL-CIO’s trade and globalization policy specialist.
She said past complaints to the Labor Department regarding Mexico’s violation of the labor cooperation pact have not led to major change and this one may be no different, but it aims to influence the negotiations by drawing attention to Mexico’s weak record on worker rights as negotiators discuss labor issues in Montreal.
“It gives ammunition at the negotiating table to U.S. and Canadian negotiators to say, ‘Your violations on NAFTA are not in the past, they’re not over with.'”
A USTR spokeswoman declined to comment on the filing.
Thus far, Canada led the call for higher labor standards in the talks, including making a proposal that the United States revise its so-called right-to-work laws in many southern states that help to limit the spread of unions in manufacturing.
Reporting by David Lawder; editing by Andrew Hay and Susan Thomas
BLOOMBERG. 25 January 2018. Canada, Mexico Describe Nafta ‘Win-Win-Win’ Opportunity at Davos
By Josh Wingrove
- ‘We are in much better standing than a year ago’ -- Guajardo
- Three Nafta chiefs will fly to Montreal for end of round six
Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo spoke on a panel at Davos, Switzerland on Thursday as their teams met thousands of miles away in Montreal during the the sixth round of talks on the North American Free Trade Agreement. Freeland cautioned that discussions on complex issues shouldn’t be rushed, and Canada is prepared for any eventuality on Nafta, while Guajardo reiterated a willingness to compromise on the key issue of automobiles.
“Today we are in much better standing than a year ago to try to find those creative solutions that will mean a win-win-win for the three countries,” Guajardo said.
Freeland, Guajardo and U.S. Trade Representative Robert Lighthizer will meet in Montreal on Monday to close out the current round of talks, a pivotal gathering where progress will determine the likelihood of reaching a deal to prevent President Donald Trump from abandoning the pact.
‘Political Leadership’
Nafta talks began in August and have been slated through March, with the seventh round expected in late February in Mexico City. Trump had initially wanted a deal by December, though trade negotiations of this scale typically take years.
Freeland called on political and business leaders at Davos to do more to build support for trade, saying it’s proven that protectionism doesn’t work.
“What’s very easy if you’re a politician, speaking to that insecure middle class, is to say, ‘It’s the fault of foreigners, it’s the fault of that terrible country,”’ she said. “And so it actually does take political leadership. I think you have to acknowledge the insecurities of the middle class and you have to say, ‘This is what we’re doing about it.’”
She said Nafta talks will be a success if they cut red tape and lead to more companies taking advantage of the accord, as 40 percent of Canadian exporters to the U.S. don’t bother using Nafta because of the regulatory burden. She cautioned against moving too quickly, particularly on discussion around “insanely complicated” automotive rules.
“It’s a complicated agreement and updating an existing agreement upon which so much economic activity depends is also a delicate task,” she said.
Nafta talks on the automotive industry revolve around the U.S. demand to hike the rules of origin, which govern what share of a car must be made in the three countries to be traded freely within the zone. Guajardo said the threshold must increase gradually, to give companies time to adapt.
AVIATION
REUTERS. JANUARY 25, 2018. Bombardier expected to lose U.S. trade dispute: Canadian government source
David Ljunggren, Allison Lampert
MONTREAL (Reuters) - Planemaker Bombardier Inc is expected to lose a hotly contested U.S. trade dispute this week, a Canadian government source told Reuters on Thursday, likely inflaming tensions between the two countries during talks to modernize NAFTA.
Trade lawyers and industry experts largely predict the International Trade Commission (ITC) will back the U.S. Commerce Department’s recommendation to slap Bombardier’s CSeries with a near 300-percent duty on sales to American carriers on Friday.
This is the first time a Canadian official has acknowledged that is the most likely outcome.
Boeing Co, the world’s largest maker of jetliners, accuses the Canadian firm of dumping the planes in the U.S. market. An ITC spokeswoman declined to comment.
“We think Bombardier is going to lose because the process is designed that way,” said the Canadian source, who requested anonymity because of the sensitivity of the situation.
“It is not a multilateral or independent or unbiased tribunal. It’s an American tribunal,” the source added.
Bombardier was not immediately available for comment.
Other industry experts, however, argue the ITC could still side with Bombardier, which has struck a deal with Airbus SE to give the European planemaker a majority stake in the CSeries.
The fate of the CSeries and the well-paid jobs associated with the plane is important both to Ottawa and the British government. The company is a big employer in Northern Ireland, where a political party is helping keep Prime Minister Theresa May in power.
May spoke to U.S. President Donald Trump on Thursday and reiterated the importance of the Bombardier jobs in Northern Ireland, her office said.
Amid anger over the Boeing challenge, Canada last year scrapped plans to buy the planemaker’s 18 Super Hornet fighter jets.
Boeing argues its business was hurt because Bombardier received illegal government subsidies and dumped the CSeries through the 2016 sale of 75 jets to Delta Air Lines.
Bombardier says Boeing never used its smallest plane, the 737 MAX 7, to compete for the order. No C Series planes have been delivered yet.
“How can you have an outcome that assesses injury when there is no export even taking place?” the Canadian source asked.
Ottawa has yet to work out how it will react to the expected ruling, the source added, citing the number of different actors involved.
The ITC is expected to make a decision on Friday. For Bombardier to win, at least three of the body’s four commissioners would have to rule for the Canadian planemaker.
Reporting by David Ljunggren and Allison Lampert; Editing by Denny Thomas, Bill Rigby and Susan Thomas
TPP
The Globe and Mail. 25 Jan 2018. ARTICLE. Agribusinesses will soar under the CPTPP
SYLVAIN CHARLEBOIS, Professor in food distribution and policy and dean of the faculty of management at Dalhousie University
Canadian supporters of international trade should recognize … that the Trudeau government did the right thing in agreeing to CPTPP.
Even as the North American free-trade agreement talks continue, we’ve learned that the Trans-Pacific Partnership is not dead after all. In fact, the trade deal among Pacific Rim countries has a new name: the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Along with Canada, it includes Japan, Mexico, Malaysia and seven other countries. The pact was made without the participation of the United States, which represented 60 per cent of the original group’s combined GDP. This was a massive loss for sure, but nonetheless, the CPTPP remains an important global deal.
The original deal was all about the United States and Japan trying to counter China’s economic emergence. Donald Trump pulled his country out of the deal when he became U.S. President, but the world is marching on, so it seems, without the United States. CPTPP is indeed NAFTA – minus the United States, of course – but with a new link to a rapidly growing market. For Canada, this is a significant gain on the world stage. If the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) was an opportunity for Canada to become a trading platform between two continents, CPTPP is a clear statement that Canada wants to become a relevant player worldwide.
This can only make our agrifood sector much stronger. Our grain and livestock industries will now have the chance to make a dent in many Asian markets. But for our supplymanaged sectors, which believe that serving Canada’s population of 36 million is enough, signing CPTPP represents a new challenge. The new deal will allow more dairy, eggs and poultry products into our market. Details have not yet been released, but it appears CPTPP will loosen tariffs on some products that are not currently allowed in our market. In other words, supply management’s supremacy is slowly disintegrating. If CETA created a breach in our highly protectionist scheme, CPTPP will blow it wide open.
Maintaining supply management has been, to a large extent, a disservice to the sector. Those still in the system are content and are desperately trying to convince the Canadian public that supply management serves them well. But it only serves those still in the system.
Several farms have disappeared over the past few decades, even though supply management was established to protect the family farm. The number of dairy farms in Canada has gone from more than 40,000 to about 11,000. With poultry and egg production, we have seen even more consolidation. This is a worldwide trend, but it begs the question: Why we are maintaining the status quo?
Through the years, politicians have all declared their support for supply management – with one notable exception: Maxime Bernier, who ended up losing the Conservative Party leadership race as a result. But governments are signing pacts that are slowly destroying supply management from the outside – while publicly supporting the regime.
Meanwhile, some major stakeholders are not waiting for governments to become more forthcoming and are hedging their bets against supply management. Canadian companies such as Saputo have already taken a position in the Asia-Pacific market by investing in Australia.
Canadian supporters of international trade should recognize, no matter what the politics are, that the Trudeau government did the right thing in agreeing to CPTPP. It validated the work of the Harper government by capturing the essence of the TPP deal. Signing this deal will mean that, by 2025, Canada’s farmers and food processors, with their ambitious targets, could increase Canada’s agrifood exports to at least $75-billion annually. CPTPP members probably hope the Unted States will eventually come to its senses and embrace multilateral agreements again. Until then, corridors crossing the Pacific to accommodate more trade will only get stronger. As we ratify this deal, we need to remember that supply management requires a different approach – one based in reality. Instead of fuelling what is already a highly polarized debate on the issue, we have to think about what Supply Management 2.0 will look like. And considering what is to come, sectors are running out of time.
CETA
Canada Opportunities Agency. January 25, 2018. Calling Atlantic Exporters Seeking New Market Opportunities in the European Union. Proximity, diversity, size and elimination of trade tariffs make the EU an attractive option to grow Atlantic exports
Moncton, NB – Helping Atlantic Canadian businesses succeed in the European Union market is a priority for the Government of Canada and the four Atlantic provincial governments and is key to raising incomes, generating growth and strengthening the middle class in the region.
From January 29 to February 2, 2018, trade experts from Global Affairs Canada’s Trade Commissioner Service along with other federal and provincial trade representatives, will be visiting Atlantic provinces to outline how Canadian exporters can benefit from preferential access to the EU under the Canada European Union Comprehensive Economic and Trade Agreement (CETA).
Through a series of information sessions, they will outline the programs and advisory support that are available to help Atlantic businesses take the guesswork out of exporting to the EU market. They will also be joined by H.E. Peteris Ustubs, Ambassador of the European Union to Canada
This initiative is made possible by investments from the Atlantic Canada Opportunities Agency, Global Affairs Canada and the four Atlantic provincial governments under the Atlantic Trade and Investment Growth Agreement.
Quotes
“We launched the Atlantic Trade and Investment Growth Strategy to showcase the best of what Atlantic Canada has to offer, to increase the region’s competitive edge and to create more jobs and greater prosperity for the middle class. These CETA information sessions will be useful for anyone interested in exporting to the European Union and contribute towards our goal of doubling the number of exporters from Atlantic Canada by 2025.”
The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development and Minister responsible for the Atlantic Canada Opportunities Agency
“CETA represents a new chapter in the relationship between the European Union and Canada and holds great promise for Canadian businesses across the country. It lowers your business costs, gives your products and services a far greater presence in the European marketplace, and makes them more competitive. Canadian companies of all sizes and from all sectors are poised to benefit from unprecedented access to half a billion customers."
The Honourable François-Philippe Champagne, Minister of International Trade
“Exporting is a key factor in growing our economy. Nova Scotia has an abundance of world-class products and services and CETA is already enhancing the success of those who are exporting now. Our hope with the information sessions is that others obtain the tools they need to start exporting.”
Honourable Geoff MacLellan, Minister of Business and Minister responsible for Nova Scotia Business Inc.
“New Brunswick has one of the most export-driven economies in Canada. Our companies have much to offer the world, from seafood and lumber to advanced fabrication and consumer products. These information sessions are a great way for more New Brunswick companies to build deeper connections with in-market experts and learn about the key market opportunities and preferred access that Canada now has to the European Union, the largest and most lucrative export market in the world.”
Honourable Francine Landry, Minister of Economic Development and Minister responsible for Opportunities NB
“CETA provides Island exporters with new opportunities to identify and engage markets in a region where we’ve seen tremendous growth. Europe is the Island’s second biggest trading partner behind the United States and our exports to the region have nearly doubled since 2012. With the reduction in tariffs and barriers to trade through CETA we see even bigger potential for Island companies. These sessions will be invaluable to Island exporters working to enter the European market.”
Honourable Chris Palmer, Minister of Economic Development and Tourism (PEI)
“I encourage our diverse producers, creators, processors and manufacturers who want to benefit from improved export opportunities to take advantage of the CETA information sessions. Enhanced coordination and collaboration by Atlantic Canada will help maximize and leverage our resources, as we aim to be more innovative, earn higher wages for our skilled workers and become even more productive. CETA has led to an unprecedented era of free trade, and this occasion is a wonderful opportunity to build on Atlantic Canada's trade links to traditional and emerging markets. This agreement not only strengthens our region's global competitiveness, it allows government to further improve our Business Innovation Agenda, and strengthen The Way Forward's vision of boosting innovation and enhancing productivity in Newfoundland and Labrador.”
Honourable Christopher Mitchelmore, Minister of Tourism, Culture, Industry and Innovation (NL)
Quick Facts
- Information sessions will be held in Halifax (January 29), Moncton (January 30), Charlottetown (January 31), and St. John’s (February 2).
- In 2016, Atlantic Canada exported over $2.7 billion worth of merchandise to the European Union, making it the region’s second largest export market after the United States.
- Atlantic exports to the European Union in 2016 included resource-based goods such as oil and gas, mining products, seafood and wood products and also aerospace parts, pharmaceuticals and navigational, measuring, medical and control instrument components. (Source: Statistics Canada - Trade Data Online)
- The EU market consists of half a billion customers, a GDP of $22 trillion and procurement opportunities worth $3 trillion. (Source: Global Affairs Canada)
- ACOA and the four Atlantic provincial governments are investing $23,400 through the Atlantic Trade and Investment Growth Agreement to support this initiative.
FULL DOCUMENT: https://www.canada.ca/en/atlantic-canada-opportunities/news/2018/01/calling_atlanticexportersseekingnewmarketopportunitiesintheeurop.html
RETAIL TRADE
StatCan. 2018-01-25. Retail trade, November 2017
- Retail sales — Canada: $50.1 billion, November 2017, 0.2% increase (monthly change)
- Source(s): CANSIM table 080-0020: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=0800020&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=
Retail sales increased for the third consecutive month in November, rising 0.2% to $50.1 billion. Sales were up in 6 of 11 subsectors, representing 37% of total retail trade.
Higher sales at gasoline stations, electronics and appliance stores and general merchandise stores offset lower receipts at new car dealers. Excluding motor vehicle and parts dealers, retail sales rose 1.6%.
After removing the effects of price changes, retail sales in volume terms increased 0.3%.
Chart 1: Retail sales increase in November
Retail sales rise on higher sales at gasoline stations and electronics and appliance stores
Receipts at gasoline stations (+5.9%) were up for the third time in four months, largely reflecting higher prices at the pump. According to the Consumer Price Index, the price of gasoline rose 7.4% in November on an unadjusted basis.
Electronics and appliance stores posted a 12.9% sales gain, on the strength of promotional events such as Black Friday coinciding with the timing of new product releases in November.
Sales at general merchandise stores (+1.8%) increased for the third consecutive month.
Sales at clothing and clothing accessories stores rose 3.0%. Higher sales were reported at clothing (+2.2%), shoe (+7.4%) and jewellery, luggage and leather goods (+4.0%) stores. This was the fifth increase in six months at clothing stores.
Following a 3.6% gain in October, sales fell at motor vehicle and parts dealers (-3.6%) in November. Lower sales at new car dealers (-5.3%) accounted for the decline at the subsector level, more than offsetting gains at other motor vehicle (+8.8%) and used car (+3.7%) dealers.
Sales up in five provinces, led by Quebec
Retail sales were up in five provinces in November.
Quebec (+0.9%) reported the largest growth in dollar terms, with gains in 9 of 11 subsectors. Retail sales in the Montréal census metropolitan area (CMA) were up 1.2%.
Receipts in Ontario (+0.3%) increased for the fifth consecutive month. Retail sales in the Toronto CMA rose 0.8%.
After three consecutive months of growth, sales in Newfoundland and Labrador declined 3.2%, largely attributable to lower sales at new car dealers.
Following a 1.9% increase in October, sales in British Columbia were relatively unchanged in November. Retail sales in the Vancouver CMA edged down 0.1%, the second decrease in 2017.
E-commerce sales by Canadian retailers
The figures in this section are based on unadjusted (that is, not seasonally adjusted) estimates.
On an unadjusted basis, retail e-commerce sales were $1.8 billion in November, accounting for 3.5% of total retail trade—their highest proportion of total retail sales in 2017. On a year-over-year basis, retail e-commerce increased 25.5%, while total unadjusted retail sales rose 7.4%.
FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/180125/dq180125a-eng.pdf
THE GLOBE AND MAIL. THE CANADIAN PRESS. JANUARY 25, 2018. Canadian retail sales up 0.2 per cent to $50.1-billion in November: Statscan
OTTAWA - Statistics Canada says retail sales rose 0.2 per cent to $50.1-billion in November, boosted by higher sales at gasoline stations and electronics and appliance stores.
The agency says sales were up in six of 11 subsectors, representing 37 per cent of total retail trade.
Sales at gasoline stations were up 5.9 per cent, boosted in large part to higher prices at the pump, while promotional events helped push up sales at electronics and appliance stores 12.9 per cent.
Offsetting the gains, sales fell at motor vehicle and parts dealers fell 3.6 per cent per cent in November as sales at new car dealers fell 5.3 per cent.
Excluding motor vehicle and parts dealers, retail sales rose 1.6 per cent.
Retail sales in volume terms increased 0.3 per cent.
REUTERS. JANUARY 25, 2018. Canada retail sales edge up in Nov on gasoline, electronics
OTTAWA (Reuters) - Canadian retail sales rose less than expected in November as higher sales of gasoline and electronics were tempered by a decline in new car purchases, data from Statistics Canada showed on Thursday.
The 0.2 percent increase in overall sales was shy of economists’ expectations for 0.7 percent, while October was revised slightly upward to 1.6 percent from 1.5 percent.
Stripping out the effect of price changes, sales volumes were up 0.3 percent in November.
Sales rose in six out of 11 sectors, accounting for 37 percent of total retail trade. Sales at gasoline stations rose 5.9 percent, up for the third time in four months, as consumers faced higher prices at the pump.
Black Friday promotions helped sales at electronics and appliance stores jump 12.9 percent, the largest gain on record. At the same time, the share of e-commerce purchases on an unadjusted basis rose to 3.5 percent of total retail sales from 2.5 percent in October, the highest proportion in 2017.
But sales at motor vehicle and parts dealers declined 3.6 percent, erasing the previous month’s gain, as consumers bought fewer new cars. Still, car sales in Canada were robust in 2017, cracking the 2 million mark for the first time.
Reporting by Leah Schnurr; Editing by Frances Kerry
INTERNATIONAL TRADE
The Globe and Mail. 25 Jan 2018. With trade war, Trump prods a fangless tiger. Emerging conflicts with the United States reveal a complicated reality for China, one in which it cannot return fire
NATHAN VANDERKLIPPE, BEIJING ANALYSIS
When U.S. President Donald Trump’s administration slapped punitive new tariffs on imports of solar panels and washing machines this week, the Chinese government responded the way many expected it to: It did nothing.
The new duties, and the threat that levies on China’s exports of steel and aluminum could be next, have given rise to warnings of looming revenge from Beijing, through new measures against U.S. auto makers, restrictions on imports of U.S. agricultural products, strengthened anti-trust investigations against U.S. multinational companies or a sell-off of U.S. Treasury bonds.
The United States, Beijing has also warned, is hurting itself nearly as badly as it is injuring China: “Trump’s raising of tariffs this time, to me, is like a Chinese saying: ‘Kill a thousand enemies at the cost of 800 of your own soldiers,’ ” said Sheng Liugang, an international trade specialist at the Chinese University of Hong Kong.
But China’s unwillingness to return more than verbal fire after the White House’s salvo this week has pointed to a more complicated reality for China. If a trade war breaks out, it has less ammunition than the United States and worse options for where to aim it.
“I don’t think China has much leverage. After all, you have a huge trade surplus against the United States,” said Tao Ran, director of the China Center for Public Economics and Governance at Renmin University in Beijing. That surplus hit a new record last year after expanding by 8.6 per cent, further underscoring China’s vulnerability to trade measures abroad.
“China and the Chinese economy cannot afford a trade war at all,” Prof. Tao said. “Because its economy is so heavily dependent on exports.”
If a trade war is in the offing, in other words, it promises to be a one-sided affair.
In Washington, plans are being laid for a multipronged trade assault on China, including additional tariffs and reprisals against alleged violations of intellectual-property rights. Mr. Trump has publicly mulled a giant “fine” against China.
In Beijing, however, few expect a direct return of fire.
Instead, China is likely to to proceed more cautiously, delivering its reprisals “indirectly,” said Zuo Chuan-chang, chief research fellow with the Academy of Macroeconomic Research at the National Development and Reform Commission, China’s powerful economic planning agency.
That could include pressing U.S. companies, particularly those with interests in both countries, to lobby Mr. Trump to back off, since his course of action is not good “for the global trade system,” Mr. Zuo said. China is also likely to challenge U.S. tariffs at the World Trade Organization. If Mr. Trump does make good on threats of further measures, however, “China will do something,” Mr. Zuo said. That could include restricting capital outflows, which would lower foreign investment dollars to the U.S.
China’s U.S. investments totalled $46-billion (U.S.) in 2016.
Another option is selling some of the $1.2-trillion in Treasury securities China owns, “as a countermeasure” that would damage the U.S. dollar, Mr. Zuo said. “It’s one of the choices,” he said.
Other possible strategies were outlined by the Communist Party-run nationalist Global Times newspaper on Wednesday, including new inspection standards for U.S. beef or limits on imports of U.S.-made electrical and mechanical parts. Beyond that, possibilities include regulations on the number of Chinese students allowed into the United States, as well as Airbus SE or Boeing Co. aircraft allowed into China.
The newspaper also raised the possibility of tariffs on U.S. cars.
Many of those measures are difficult for China to achieve without causing itself substantial harm, however. It does not have a domestically produced jetliner that can compete with foreignmade models, as one example. Its protectionist measures have also kept out purely foreign players, giving it fewer targets. Overseas car makers have formed joint ventures with Chinese companies for most of their sales in the world’s largest auto market. In 2016, only 4 per cent of cars sold in China were imported.
“The increasingly complex and two-way nature of many of these industries make it less attractive to impose tariffs in many industries,” said Louis Kuijs, head of Asia economics at Oxford Economics.
“If there were to be an escalation, it will hurt China more than it will hurt the U.S.,” he added.
Exports to the United States account for almost 4 per cent of China’s economy, while exports to China make up less than 1 per cent of U.S. GDP.
One particular U.S. vulnerability lies in agriculture, where China could tighten health and safety standards to inflict pain on U.S. producers.
Chinese authorities also have the ability to fire back through less obvious means, such as antitrust probes of U.S. companies, Prof. Sheng said.
“China could, of course, retaliate with tariff measures, but that would create a backlash for our own consumers,” he said. That said, “raising tariffs is not the only option.”
Perhaps the best thing China can do is acknowledge that trade frictions with the United States are inevitable and prepare industries that are likely to be affected, said Shen Guobing, deputy director of the Institute of World Economy at Fudan University.
China could also consider what he called a “multilateral trade transfer” to reduce its dependence on the United States . But that’s no quick fix: Such a plan “could be realized in 50 years,” Prof. Shen said.
Indeed, if the Trump administration carries through on the tough measures it has signalled, Beijing will be forced to confront “a very difficult choice,” Prof. Tao said.
At the heart of many trade frictions with the United States – and other Western economies – lie Chinese rules that have, despite occasional promises to the contrary, largely fenced off important segments of its economy from foreign investment. The finance, telecommunications, aviation, transportation, resource and energy sectors are “heavily regulated and dominated by state-owned enterprises,” Prof. Tao said.
“China’s domestic markets could be more open,” he said, but the country’s current leadership, under President Xi Jinping, is charting a course in the opposite direction by strengthening the role of government in the economy. It’s part of a broader rejection of Western constructs as China attempts to establish its own political and economic model.
Therein lies the difficult choice: If Mr. Xi is willing to abandon that course, he could, perhaps, assuage some of the anger abroad.
But, Prof. Tao warned, “If you don’t want to do that, then you have to wait for more trade wars.”
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.
FULL DOCUMENT: https://www.canada.ca/en/global-affairs/news/2018/01/minister_of_internationaltradelauncheswebpagetohelpcanadianbusin.html
EDC. JANUARY 25, 2018. WEEKLY COMMENTRY. Can Global Shipping Stay Upright?
By Peter G Hall, Vice President and Chief Economist
Suddenly, everyone’s talking growth. And the way it’s being talked about is with surprise and shock, as if it wasn’t really expected. I guess so many had been lulled into the world of sub-par performance that the upshift took them unawares. At the same time this reboot has many spooked – analysts openly wonder whether we can actually handle all the growth. How is the global shipping industry coping?
A look at the global shipping industry
This industry dealt with the same question back in 2004. An upshift in growth that followed an already-long global expansion taxed the shipping industry to its limits. Ports couldn’t handle all the traffic, and at the same time vessel capacity was so tight that lease rates skyrocketed. The problem was most acute in the US, but the effects were felt universally. Crisis provoked action on a number of fronts, and by the time the recession set in, global shipping was swamped with surplus capacity.
It has taken a long time to get upright, but today, global shipping is definitely full steam ahead. By a number of different measures, 2017 was the best year since the Great Recession and the false start to the new cycle in 2010. Growth in container shipping was the best by far in the past six years, rising by an estimated 6.4 per cent. That’s an impressive upshift; during the past five years, annual growth has averaged just 2.3 per cent.
What’s driving globally shipping growth?
What’s driving the increase? Bellwether ports were up sharply last year. Singapore has seen the number of vessel arrivals surge ahead in the past two years, with activity maintaining a very strong clip through the end of 2017. No single category is driving this growth; it seems well spread across general and bulk cargo, oil and non-oil, and also containers.
China’s performance is also an eye-catcher. After five years of meandering, 2017 saw cargo shipments in Shanghai post a decisive 9.1 per cent increase. Container throughput in the port saw a similar 8.4 per cent surge, far and away the best showing for the port since 2011. This suggests not only that global growth is making its way to China’s shores, but that some of the Middle Kingdom’s vast supply surpluses are being soaked up.
US shipping ports are surging
These and other globally-connected ports would not be reviving without a corresponding shift in developed-market activity. Look no further than US shipping. The largest ports are surging: Los Angeles posted a second year of strong growth, carrying a solid trend into 2018. Its twin port at Long Beach has struggled to get back to previous peak, but a sharp up-trend since late 2016 pushed it over that marker last year with momentum that bodes well for 2018 performance. On the Atlantic coast, the important New York/New Jersey port last year posted its fastest growth since 2010, and the trend heading into this year is very strong.
The lag in European data makes it hard to determine what is happening in that continent’s key ports. However, the upsurge in growth currently underway in the Euro Area together with activity in other major ports hints strongly that Europe is in the game.
Can the shipping industry handle the growth?
Does this mean we are running pell-mell back into a 2004 situation? A careless glance at recent data could actually incite panic. The Baltic Dry Index of bulk carrier rates rose by what looks like a stunning 70 per cent last year. The growth is arresting, but the level of the index is anything but: its running at about one-half of its immediate post-recession level, and is just a shadow of the peak levels reached in 2004 and the 2007-08 period.
Concurrently, the Harpex index of container ship prices says virtually the same: recent prices have more than doubled, but apart from the price collapse of 2015, today’s rates are among the lowest in the past decade. Together, these shipping prices suggest that the vast capacity additions that cascaded into the market just as the Great Recession began are more than accommodating current growth. And judging by current shipping capacity, this is one piece of the logistics chain that we won’t have to worry about for a good few years.
The bottom line?
World shipping statistics Are a great illustration of the pickup in the global economy. Cynics who believe that the world is running on empty need to have a second look at the vast spare capacity in this industry, and guess again about the world’s ability to sustain nascent strong performance.
DAIRY
StatCan. 2018-01-25. Dairy statistics, November 2017
From January to November, 146 201 tonnes of cheddar cheese were produced, a 2.6% increase from the same period in 2016. Production of specialty cheese rose from 276 312 tonnes to 285 582 tonnes (+3.4%) over the same 11-month period. Overall, through 11 months, total cheese production (the sum of cheddar and specialty cheeses) has increased 3.1% in 2017 compared with 2016.
Although creamery butter production decreased from October 2017 to November 2017, the November total of 7 941 tonnes represents a 1.5% increase compared with November 2016. Year-over-year creamery butter has shown increases in every month of 2017.
Total cash receipts from milk and cream sold off farms totalled $551.5 million in November, up 3.8% from November 2016.
FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/180125/dq180125f-eng.pdf
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LGCJ.:
