CANADA ECONOMICS

NAFTA

1) Itinerary for February 7 to 9, 2018 Ottawa, Ontario - February 6, 2018

Itinerary for the Prime Minister, Justin Trudeau, for Wednesday, February 7, 2018:

Note: All times local

Ottawa, Ontario

9 a.m. The Prime Minister will attend the National Caucus meeting.

11:30 a.m. The Prime Minister will depart for Chicago, Illinois.

Canada Reception Centre (Hangar 11)

Macdonald-Cartier International Airport

Note for media:

Photo opportunity of departure

Chicago, Illinois

12:40 p.m. The Prime Minister will arrive in Chicago, Illinois.

O’Hare International Airport

Note for media:

Photo opportunity upon arrival

2:15 p.m. The Prime Minister will meet with the Governor of Illinois, Bruce Rauner.

Quadrangle Club

University of Chicago

Note for media:

Pooled photo opportunity at the beginning of the meeting

2:50 p.m. The Prime Minister will meet with the Mayor of Chicago, Rahm Emanuel.

Quadrangle Club

University of Chicago

Note for media:

Pooled photo opportunity at the beginning of the meeting

4:30 p.m. The Prime Minister will deliver an address at the University of Chicago Institute of Politics. An armchair discussion with David Axelrod will follow.

Auditorium

Mandel Hall

University of Chicago

Note for media:

Open coverage

Media should arrive no later than 3:30 p.m.

Media Appearances

8 p.m. EST – An interview with the Prime Minister will air on The Axe Files with David Axelrod podcast.

Itinerary for the Prime Minister, Justin Trudeau, for Thursday, February 8, 2018:

Note: All times local

San Francisco, California

9:35 a.m. The Prime Minister will arrive in San Francisco, California.

San Francisco International Airport

Note for media:

Photo opportunity upon arrival

11:30 a.m. The Prime Minister will participate in a diversity and equality roundtable with the Chairman and CEO of Salesforce, Marc Benioff, and tech leaders.

Salesforce Offices

415 Mission Street

Note for media:

Pooled photo opportunity

2:15 p.m. The Prime Minister will visit the AppDirect offices and meet with employees.

AppDirect Offices

650 California Street

Note for media:

Pooled photo opportunity

3 p.m. The Prime Minister and the President and Co-CEO of AppDirect, Daniel Saks, will deliver remarks. A media availability will follow.

AppDirect Offices

650 California Street

Note for media:

Open coverage

4:30 p.m. The Prime Minister will meet with the chairman and CEO of Amazon, Jeff Bezos.

St. Regis Hotel

125 3rd Street

Closed to media

5:10 p.m. The Prime Minister will meet with the president and CEO of eBay, Devin Wenig.

St. Regis Hotel

125 3rd Street

Note for media:

Pooled photo opportunity

5:50 p.m. The Prime Minister will meet with the chairman and CEO of Amgen, Robert Bradway.

St. Regis Hotel

125 3rd Street

Note for media:

Pooled photo opportunity

Itinerary for the Prime Minister, Justin Trudeau, for Friday, February 9, 2018:

Note: All times local

San Francisco, California

8:15 a.m. The Prime Minister will meet with the Governor of California, Jerry Brown.

Fairmont San Francisco Hotel

Note for media:

Pooled photo opportunity

9 a.m. The Prime Minister will meet with the Lieutenant Governor of California, Gavin Newsom.

Fairmont San Francisco Hotel

Note for media:

Pooled photo opportunity

Los Angeles, California

2:20 p.m. The Prime Minister will arrive in Los Angeles, California.

Los Angeles International Airport

Note for media:

Photo opportunity upon arrival

6:15 p.m. The Prime Minister will deliver an address at the Ronald Reagan Presidential Library.

Air Force One Pavilion

Ronald Reagan Presidential Library

Note for media:

Open coverage

Media must RSVP with Melissa Giller: mgiller@reaganfoundation.org / 805-522-2977

Prime Minister to travel to the United States Ottawa, Ontario - January 19, 2018

The Prime Minister, Justin Trudeau, today announced that he will travel to the United States from February 7 to 10, 2018.

This visit – which includes stops in Los Angeles, San Francisco, and Chicago – will provide an opportunity for the Prime Minister to further strengthen the deep bonds that unite Canada and the United States.

In the Los Angeles area, the Prime Minister will deliver remarks at the Ronald Reagan Presidential Foundation and Institute in Simi Valley. During the remarks, he will underscore the interconnectedness of the Canada-U.S. economies.

In San Francisco, the Prime Minister will meet with local business leaders and entrepreneurs to explore opportunities for increased collaboration between our countries.

Before heading to California, the Prime Minister will meet with key officials in Chicago and deliver a speech at the University of Chicago Institute of Politics to highlight the importance of public service, and how it can contribute to a prosperous middle class and stronger Canada-U.S. economic and political ties.

Quote

“Canadians and Americans know we are all better off when we work together to grow the middle class, and create more opportunities for people on both sides of the border. I look forward to meeting with government and business leaders in the United States again to explore new opportunities for collaboration and growth, so we can build a more prosperous future for people in both countries.”

—The Rt. Hon. Justin Trudeau, Prime Minister of Canada

Quick Facts

• Prime Minister Trudeau last visited the United States in October 2017.
• Canada and the United States share one of the largest trading relationships in the world. Bilateral trade between the two countries was valued at nearly $882 billion in 2016, and Canada is the largest secure supplier of energy to the U.S.
• The two countries share the longest, secure border in the world, over which some 400,000 people and $2.4 billion worth of goods and services cross daily.
• Canada buys more goods from the United States than China, Japan, and the UK combined.
• Canada is the number one export destination for most American states, and cross-border trade and investment supports nearly nine millions jobs in the United States.

Canada and United States Relations: http://international.gc.ca/world-monde/united_states-etats_unis/relations.aspx?lang=eng

The Globe and Mail. 8 Feb 2018. On U.S. trip, the Prime Minister must manage to pitch a trade deal to two groups with opposing views, Campbell Clark writes. In Chicago, the PM hones his pitch on trade to a skeptical left-leaning audience
CAMPBELL CLARK, Columnist

American liberals tend to see Mr. Trudeau as a kind of glamorous global contrast to Mr. Trump. So the Prime Minister talked about himself, about his path to politics.

Justin Trudeau has some drawing power in the United States. At the University of Chicago, there was an overflow crowd of almost a thousand to hear a glamorous Canadian PM whose name they actually know. The hard part was using his popularity to sell an unpopular pro-NAFTA message in this Democraticdominated city.

So he veered left: There were the familiar statistics about how many American jobs depend on trade with Canada, but an emphasis on the idea that renegotiating the North American free-trade agreement could widen its benefits. There is anxiety that trade deals only benefit the one per cent and large corporations, he told his audience; NAFTA talks can be about fixing that, with stronger labour provisions, environmental protections, even prowomen measures.

“This is an opportunity for us to listen to the anxiety and the concerns that ordinary people feel,” he told the audience.

That’s not a new idea for Mr. Trudeau, who likes to talk about “progressive trade.” But it’s a different emphasis for a trip to the United States. It wasn’t just that he was telling Americans that it would be folly to tear up NAFTA because it would disrupt American jobs. It’s that he was telling an American audience that NAFTA can be very different.

“The issue is not trade/no trade,” he said. “The issue is what kind of trade.”

The irony is that Mr. Trudeau was selling something to one side of the U.S. political spectrum that the other side won’t accept. Mr. Trudeau’s government has put forward labour proposals, and a few other “progressive trade” ideas in NAFTA talks, but no one really expects the administration of President Donald Trump, or his Republican Party, to accept them.

This was Mr. Trudeau trying to tailor the message to the audience. In Chicago, largely a liberal Democratic audience, and it didn’t take much to tell the crowd at the university leaned that way.

“We’re all superaware of everything going on in the United States,” Mr. Trudeau said at one point in his speech, and the crowd, obviously thinking he was hinting at Mr. Trump, started to murmur and laugh.

The Prime Minister has no trouble finding an American stage. He’s on this threeday trip to U.S. cities primarily because he was offered an opportunity to speak at the Ronald Reagan Library in California, and the symbolism, the possibility of invoking the free-trading spirit of a hero of Mr. Trump’s party, was too good to pass up.

In Chicago, his host was David Axelrod, the former Barack Obama strategist, who also put the PM on his CNN-affiliated political podcast whose invitees are usually major U.S. political players such as Senator Mark Warner and Condoleezza Rice, or celebrities such as Whoopi Goldberg and Tom Hanks. Mr. Trudeau was probably invited as a bit of both.

American liberals tend to see Mr. Trudeau as a kind of glamorous global contrast to Mr. Trump. So the Prime Minister talked about himself, about his path to politics. He told the crowd he came to power by fighting a Conservative Party that was using divisive politics such as an antiMuslim snitch line and attack ads with more hopeful efforts to pull people together. This crowd understood it as underlining how different he is to Mr. Trump, and gave him a standing ovation at the end.

But the message Mr. Trudeau is really trying to get across, on NAFTA, isn’t an easy sell in Midwest cities such as Chicago, where the trade deal is seen as the cause of plant closings. One of Mr. Axelrod’s forgotten sorties in the 2008 Democratic primary campaign was to accuse Hillary Clinton of lying to the American people about her role in building NAFTA. For many Democrats, NAFTA is a dirty word.

Mr. Trudeau read off the statistics – that exports to Canada and Mexico of corn, a big Illinois crop, have multiplied seven times, and that more than 300,000 Illinois jobs depend on Canada. There were probably still many doubters of his conclusion that the U.S. and Canadian economies have “thrived” under NAFTA for 25 years.

The fact that Mr. Trudeau regularly gets a public platform in the United States gives him a chance to issue those reminders that Canadian trade matters to Americans, however – and, he hopes, sow doubts on all sides of American politics about the wisdom of simply ripping up NAFTA. The problem is persuading NAFTA critics at both ends of the U.S. political spectrum who don’t agree with each other. And the progressive trade message he tailored to Chicago Democrats might have to be reworked a little by the time he gets to the Reagan library on Friday to summon the memories of the Gipper’s free-trading ethos.

The Globe and Mail. 8 Feb 2018. Ontario targets ban on New York steel in retaliation for state’s protectionist law. Buy American: Spat’s impact on NAFTA talks is unclear
ADRIAN MORROW, U.S. CORRESPONDENT WASHINGTON

Ontario’s retaliation against New York state’s Buy American law will likely entail a prohibition on the use of iron and steel from the state in provincial government construction projects, and possibly a ban on New York-based construction firms from bidding for the contracts, The Globe and Mail has learned.

A day after Premier Kathleen Wynne announced that she would table legislation this month giving her government the power to bring the hammer down on the Empire State for its protectionist procurement policies, new details emerged on what the fight-back will entail.

A source with knowledge of Ontario’s plans said on Wednesday that the idea is to mirror New York’s law as closely as possible. Because Albany is mandating that American iron and steel be used in state road and bridge construction for projects of more than US$1-million, Queen’s Park will likely limit its reprisal to construction contracts and may narrow it further to encompass only iron and steel. The source said details are still being worked out, but the province would probably enforce these restrictions by having them written into public tenders.

The U.S. legislation was signed into law by Governor Andrew Cuomo in December and takes effect on April 1. The Ontario bill will land on Feb. 20. After it passes, it will be up to Ms. Wynne’s cabinet to enact the actual retribution. The proposed law would allow the government to take similar action against any state that implements protectionist policies. A Buy American bill passed the Texas legislature last year, for instance, but has not been signed into law.

Lobbying from the Ontario government last spring helped kill a far more extensive New York proposal that would have imposed Buy American requirements on most government contracts worth more than US$100,000.

How effective Ms. Wynne’s move will be is an open question.

Infrastructure Ontario, the Crown corporation that handles most public construction projects – from hospitals to roads to transit lines – uses “local knowledge” criteria when evaluating bids, giving a leg up to Ontario companies. The effect is that U.S. companies already face a disadvantage when bidding for Ontario contracts, which dilutes the impact of Ms. Wynne’s new restrictions, said Mark Warner, a former Ontario government lawyer.

“I hear the huffing and puffing for this, but what does Ontario ultimately have to offer? We already have things that are closed off,” said Mr. Warner, who now practises trade law in both Ontario and New York State.

“I don’t see how Canada can win a trade war with the United States, and I don’t see how Ontario can win a trade war with the United States.”

Also unclear is whether the subnational spat will have any ramifications for NAFTA talks. Queen’s Park won an exemption for Infrastructure Ontario from the procurement rules in Canada’s free-trade deal with the European Union, and would have to be willing to forgo this for Canada to make a compelling offer on more open government contracting in the renegotiation of the North American free-trade agreement, Mr. Warner said.

Mr. Cuomo’s office did not respond to The Globe’s requests for comment.

The Ontario government played down the protectionism of its “local knowledge” requirements, arguing that they are “not intended to discourage international companies.”

“Local knowledge requirements are a relatively small component of Infrastructure Ontario’s scoring system and are relevant to specific projects. They are primarily related to health and safety regulations; they do not apply to local content or suppliers,” Alex Benac, a spokesman for Infrastructure Minister Bob Chiarelli, wrote in an e-mail.

But Mr. Benac did not answer questions about whether Queen’s Park would allow Infrastructure Ontario to be included in future NAFTA procurement provisions.

The Premier announced her retaliation plan during a visit to Washington to lobby the Trump administration – including chief NAFTA negotiator John Melle – on the benefits of preserving the trade deal. “My first choice is not to be in some kind of trade conflict with a particular state or with the United States. That’s why I support NAFTA,” she told The Globe. “But if there is going to be this kind of action that would disadvantage Ontario workers and Ontario companies, then we have to respond.”

Ms. Wynne spent Wednesday in New York City meeting business leaders and holding a “fireside chat” with urbanist Richard Florida. Her office said she raised New York State’s Buy American legislation at round tables with the Business Council for International Understanding and RBC Dominion Securities Inc.

EDC. FEBRUARY 8, 2018. WEEKLY COMMENTARY. America’s Red-Hot Auto Sector
By Peter G Hall, Vice President and Chief Economist

There’s no denying that vehicle sales in the US are red-hot. That’s hardly news, though; annual sales have topped the 17 million-unit level for three years running. In spite of the so-so growth the economy has cranked out in the past seven years, changing overall preferences and a millennial generation that isn’t supposed to be as interested in vehicle ownership, auto sales rocketed back from the recession’s chasm, and were arguably the first industry to truly recover. What drove this stunning growth, and what does the near-term future look like?

Compared with previous growth phases, this one is quite impressive. The speed of recovery is more like the post-1982 period, although back then, today’s levels were never matched. The previous growth cycle began in 1992, and was slower to get going. Back then, today’s sales levels were only reached after eight years of expansion, and the starting point was much higher than in this phase. This time, from the recession’s deep trench, it took only six years for sales to cross the 17-million-unit level.

Top selling vehicles in the US

What are the hot-spots, by vehicle type? Light trucks are leading the charge, boasting seven years of uninterrupted expansion. However, vans and SUVs, the darlings of the past, are no longer the sales powerhouses. That honour goes both to pickup truck sales, which, while growing sharply, still fall shy of previous peak levels, and crossover utility vehicles (CUVs) which have surged from almost nothing in 2000 to 6 million units in 2017. It hasn’t been rosy for all segments of sales, though. Car sales did rise, but since 2014 have sunk back by a total of 21 per cent.

The market as a whole may have come roaring back, but the Detroit-3 aren’t out in front. Things had already soured for the D-3 when recession took them to the brink. Since then, in both cars and light trucks, they have been losing market share. While they used to own the light truck space, D-3 shares have come down from 65 per cent in 2007 to 54 per cent last year. For cars, the news is even worse. At just 40 per cent in 2000, the D-3 now grab just 26 per cent of the total market.

At the same time, the share of US vehicle sales that are produced in North America has see-sawed. Back in the mid-1980s, the domestically-produced share of sales was about three-quarters of the total. It soared to 89 per cent in the mid-1990s, but since then has retreated right back to the 75 per cent level, and is in a bit of a holding pattern there. And then the allocation within North America has shifted, with Mexico’s production gains concerning many in America.

US auto industry back to peak levels in 2016 and 2017

Even so, put another way, production inside the US seems as red-hot as sales. The Federal Reserve Board’s capacity utilization numbers peg the auto industry at peak levels in 2016 and 2017. You really have to go back to the late 1970s to find a number that’s significantly higher than current utilization. Recent investment announcements will no doubt alleviate some of that pressure, but high sales levels will keep things tight.

A further bright signal is truck sales. Medium-duty vehicles are on a multi-year surge, and could test previous peak levels. This speaks to rising business investment, as these are typically used for more industrial purposes. Even more inspiring is the recent jump in heavy truck sales, a noted bellwether of wider growth.

Canada’s auto industry vulnerable in NAFTA renegotiations 

Bringing the story together, it is evident that while sales are scorching, there are concerns about how that is cascading into activity in the local market. The sector is occupying a prominent spot in the current NAFTA renegotiations, with the US proposing aggressive US and North American content requirements. Canada’s industry has obviously benefited from the rebound in US sales, and has attracted recent investments that bode well for the future. Even so, our part of the industry is vulnerable to changes that may come with a redesigned NAFTA, or worse still with no NAFTA at all. Among all industries, the auto sector is the one that we judge most vulnerable to possible changes.

The bottom line?

Vehicle sales in the US are about as hot as they ever get, and the heat is expected to persist. In general, the industry is relieved, rejoicing and very busy. Break down the numbers a few ways, and the story is not quite as rosy. This has heated up the politics around the industry, bringing uncertainty to its future, and hesitation to investment plans – at a moment when new spending is badly needed, on multiple fronts.

ECONOMICS

StatCan. 2018-02-08. Canadian Economic News, January 2018
 
The January 2018 issue of Canadian Economic News is now available.

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

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

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

This module provides a concise summary of selected Canadian economic events, as well as international and financial market developments by calendar month. It is intended to provide contextual information only to support users of the economic data published by Statistics Canada. In identifying major events or developments, Statistics Canada is not suggesting that these have a material impact on the published economic data in a particular reference month.

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

Resources

• On January 17th, the Canada-Newfoundland and Labrador Offshore Petroleum Board (C‑NLOPB) announced it had suspended petroleum-related operations conducted by the SeaRose Floating, Production, Storage and Offloading (FPSO) vessel operating in the White Rose Field, pursuant to Husky Oil Operations Limited's Operations Authorization. The C-NLOPB said the decision related to an incident on March 29, 2017 when an iceberg entered the Ice Exclusion Area of the SeaRose FPSO. On January 26th, the C-NLOPB announced it had withdrawn the suspension.
• On January 19th, Vancouver-based Teck Resources Limited announced that a significant pressure event had interrupted operations in the coal dryer at Teck's Elkview mine. The company said that preliminary damage assessment has determined that repairs to the dryer may take in the range of four to six weeks. Teck also said that it expects lost production in the range of 200,000 tonnes of clean coal.
• On January 11th, the United Steelworkers Local 9700 announced that more than 1,000 employees at the ABI aluminum smelter in Bécancour, Quebec, had been locked out.
• Calgary-based Suncor Energy Inc. announced that the Fort Hills project is continuing its steady ramp up of production following the startup of secondary extraction on January 27, 2018. The company said Fort Hills remains on track to reach 90% capacity by the end of 2018.
• Hydro-Québec announced that Massachusetts utilities had selected a Hydro- Québec proposal to supply 9.45 TWh of energy to the state's electric distribution companies. Hydro-Québec said it will invest over $680 million for the Québec portion of the Northern Pass Transmission Project, consisting of construction of a new transmission line and equipment additions in the Des Cantons substation. Hydro-Québec said the next steps are to negotiate long-term contracts and obtain regulatory approval of agreements to ensure the delivery of energy over the next 20 years.
• The Government of British Columbia announced it is proposing a second phase of regulations to improve preparedness, response and recovery from potential spills of liquid petroleum products. The Government said that for the second phase it will be looking for feedback in five areas: response times; geographic response plans; compensation for loss of public and cultural use of land, resources or public amenities; maximizing application of regulations to marine spills; and restrictions on the increase of diluted bitumen transportation until the behaviour of spilled bitumen can be better understood and there is certainty regarding the ability to adequately mitigate spills. The Government said the process to receive feedback on the proposed regulations will feature engagement with First Nations, and that it will meet with industry, local governments and environmental groups over the coming weeks and months.

Manufacturing

• Bombardier Commercial Aircraft and EgyptAir Holding Company announced on December 29th that the parties had executed a firm agreement for the sale and purchase of 12 CS300 aircraft along with purchase rights for an additional 12 CS300 aircraft. Bombardier said EgyptAir's Letter of Intent was announced previously on November 14, 2017 and that, based on the list price of the CS300 airliner, the firm-order contract would be valued at approximately USD $1.1 billion. Bombardier also said that should EgyptAir exercise the 12 purchase rights, the contract value would increase to nearly USD $2.2 billion.
• Vancouver-based Aurora Cannabis Inc. and CanniMed Therapeutics Inc. of Saskatoon announced they had entered into a support agreement whereby the Board of Directors and the Special Committee of the CanniMed Board have agreed to support a new offer made by Aurora for the acquisition of all the issued and outstanding shares of CanniMed not owned by Aurora, for a total consideration of approximately $1.1 billion. The companies said the New Offer and the transaction are subject to customary closing conditions, including Canadian Competition Act approval.
• Leamington, Ontario-based Aphria Inc. and Nuuvera Inc. of Toronto announced they had entered into a definitive arrangement agreement pursuant to which Aphria will acquire 100% of the issued and outstanding common shares of Nuuvera, for a transaction value of approximately $826 million. The companies said the transaction is expected to close in April 2018, subject to Nuuvera shareholder and regulatory approvals.
• Toronto-based Campbell Company of Canada announced plans to close its manufacturing facility in Toronto and move its Canadian headquarters and commercial operations to a new location in the Greater Toronto Area. The company said it plans to operate the Toronto manufacturing facility for up to 18 months and will close it in phases, transitioning its production to three U.S. thermal plants in North Carolina, Ohio, and Texas.
• Germany-based Dr. Oetker announced it will close its leased pizza manufacturing plant in Grand Falls, New Brunswick at the end of May. The company said an estimated 70% of the manufacturing will transition to its owned Hub production facility in London, Ontario, while 30% of production will move to its Lodi, New Jersey plant.

Finance and insurance

• The Office of the Superintendent of Financial Institutions Canada's (OSFI) final version of Guideline B-20 – Residential Mortgage Underwriting Practices and Procedures – took effect January 1, 2018. The revised Guideline applies to all federally regulated financial institutions and sets the new minimum qualifying rate for uninsured mortgages as the greater of the five-year benchmark rate published by the Bank of Canada or the contractual mortgage rate +2%.
• RBC Royal Bank, TD Canada Trust, Scotiabank, BMO Bank of Montreal, CIBC, National Bank, Desjardins Group, HSBC Bank Canada, and B2B Bank announced they had increased their prime lending rate by 25 basis points from 3.20% to 3.45%, effective January 18, 2018.
• Toronto-based Brookfield Business Partners L.P. announced that it and institutional partners had entered into an agreement to acquire 100% of Westinghouse Electric Company LLC of Pennsylvania for approximately USD $4.6 billion. Brookfield said the transaction is expected to close in the third quarter of 2018, subject to Bankruptcy Court approval and customary closing conditions including regulatory approvals.

Other news

• The Bank of Canada raised the target for the overnight rate by 25 basis points to 1.25% on January 17th. The last change in the target for the overnight rate was a 25 basis-point increase announced in September 2017.
• Ontario's general minimum wage rose from $11.60 per hour to $14.00 per hour on January 1, 2018. The Government of Ontario said the general minimum wage will increase again to $15.00 per hour on January 1, 2019. The Government also announced that OHIP+: Children and Youth Pharmacare came into effect on January 1, 2018.
• The Government of Nova Scotia announced that tax changes, including an increase in the tax-free basic personal amount, came into effect on January 1, 2018.
• The Government of Quebec announced it will raise the province's minimum wage from $11.25 per hour to $12.00 per hour, effective May 1st, 2018.
• The Government of the Northwest Territories announced it will raise the minimum wage from $12.50 per hour to $13.46 per hour, effective April 1st, 2018.
• The U.S. Department of Commerce (DOC) announced its affirmative preliminary determination in the countervailing duty (CVD) investigation of imports of uncoated groundwood paper from Canada. The DOC said that it has preliminarily determined that exporters from Canada received countervailable subsidies ranging from 4.42% to 9.93%, and that it would instruct U.S. Customs and Border Protection to collect cash deposits from importers of uncoated groundwood paper from Canada based on these preliminary rates.
• The World Trade Organization (WTO) announced that Canada has requested WTO consultations with the United States concerning certain laws, regulations and other measures maintained by the United States with respect to U.S. anti-dumping and countervailing duty proceedings.
• On January 19th, the Government of Canada announced it had filed requests for panel reviews under NAFTA Chapter 19, following the U.S. Department of Commerce's final subsidy and dumping determinations of duty rates of nearly 300% on future imports of Bombardier's C Series aircraft. The Government also said it filed a request for a panel review under NAFTA Chapter 19, following the U.S. International Trade Commission's final determination of material injury on Canadian softwood lumber products.
• On January 23rd, the Government of Canada announced that it and the 10 other remaining members of the Trans-Pacific Partnership concluded discussions on a new Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
• On January 26th, the United States International Trade Commission (USITC) announced it had determined that a U.S. industry is not materially injured or threatened with material injury by reason of imports of 100- to 150-seat large civil aircraft from Canada that the U.S. Department of Commerce has determined are subsidized and sold at less than fair value. The USITC said that as a result, no antidumping or countervailing duty orders will be issued.
• Concord, Ontario-based Toys "R" Us Canada said that about 180 stores in the United States will close in the coming months and that all 83 stores in Canada are open for business as usual.
• UK-based Carillion Plc announced that it and other companies in the Carillion group had entered into an insolvency process known as compulsory liquidation, and that an order had been granted to appoint the Official Receiver as the liquidator of Carillion. On January 25th, Concord, Ontario-based Carillion Construction Inc., Carillion Canada Inc., Carillion Canada Holdings Inc., and Carillion Canada Finance Corp. announced they had been granted an order from the Ontario Superior Court of Justice under the Companies' Creditors Arrangement Act. The companies said the Initial Order provides for a stay of proceedings for an initial one month period, subject to extension thereafter as the Court deems appropriate.
• Montreal-based Yellow Pages Limited announced it will take measures to reduce its workforce by approximately 500 positions, representing close to 18% of its employees on a consolidated basis, with reductions occurring across Canada and in all functions of the business.
• Calgary-based Shaw Communications Inc. announced it was implementing a Voluntary Departure Program from January 31st to February 14th under which approximately 6,500 Shaw and Freedom Mobile employees have been offered a voluntary departure package.
• Saint-John, New Brunswick-based J.D. Irving, Limited announced it is forecasting over 10,400 hires across the company's operations in Canada and the U.S. The company said 84% of the jobs are in Atlantic Canada and that the three-year forecast is a result of anticipated retirements, business growth, and normal workforce turnover.

United States and other international news

• The U.S. Federal Open Market Committee (FOMC) maintained the target range for the federal funds interest rate at 1.25% to 1.50%. The last change in the target range was a 25 basis point increase announced in December 2017.
• The European Central Bank (ECB) left the interest rate on the main refinancing operations of the Eurosystem unchanged at 0.00%, and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.25% and -0.40%, respectively. The ECB also confirmed that net asset purchases will continue at a monthly pace of €30 billion until the end of September 2018.
• The Bank of Japan (BoJ) announced it will continue to apply a -0.1% interest rate to the Policy-Rate Balances in current accounts held by financial institutions at the BoJ. The BoJ also said it would continue to purchase Japanese government bonds (JGB) so that 10-year JGB yields will remain at around zero percent.
• Virginia-based Dominion Energy, Inc. and SCANA Corporation of South Carolina announced an agreement for the companies to combine in a stock-for-stock merger. The companies said the transaction, including assumption of debt, is valued at approximately USD $14.6 billion and is expected to close in 2018 upon receipt of regulatory and shareholder approvals.
• France-based Airbus SE announced that Dubai-based Emirates Airline has signed a Memorandum of Understanding to acquire up to 36 A380 aircraft, valued at USD $16 billion at latest list prices. Airbus said deliveries are to start in 2020.
• France-based Sanofi S.A. and Bioverativ Inc. of Massachusetts announced they had entered into a definitive agreement under which Sanofi will acquire all of the outstanding shares of Bioverativ for an equity value of approximately USD $11.6 billion. The companies said the transaction is expected to close within three months, subject to the satisfaction or waiver of customary closing conditions.
• New York-based Thomson Reuters Corporation announced it will sell a 55% majority stake in its Financial and Risk (F&R) business to private equity funds managed by The Blackstone Group, also of New York. The company said the transaction values the F&R business at approximately USD $20 billion. Thomson Reuters said it expects the transaction to close in the second half of 2018, subject to specified regulatory approvals and customary closing conditions.
• New York-based American International Group, Inc. (AIG) announced it had entered into a definitive agreement to acquire all outstanding common shares of Validus Holdings, Ltd. of Bermuda for an aggregate transaction value of USD $5.56 billion. AIG said the transaction is expected to close in mid-2018, subject to approval by Validus shareholders and other customary closing conditions.
• Arkansas-based Wal-Mart Stores, Inc. announced it plans to increase the starting wage rate for all hourly associates in the United States to USD $11.00, expand maternity and parental leave benefits and provide a one-time cash bonus for eligible associates of up to $1,000. The company said the increase in wages will take effect in February. Wal-Mart also announced that Sam's Club, a division of Wal-Mart Stores, Inc., would close 63 clubs across the United States.
• Ohio-based Macy's Inc. announced a number of restructuring activities, including the closure of 11 stores in early 2018, 4 of which were previously disclosed. Macy's also said it intends to close approximately 19 additional stores as leases or operating covenants expire or sale transactions are completed.

Financial market news

• Crude oil (West Texas Intermediate) closed at USD $64.73 on January 31st, up from USD $60.42 at the end of December. The Canadian dollar closed at 81.35 cents U.S. on January 31st, up from 79.71 cents U.S. on December 29th. The S&P/TSX closed at 15,951.67 on January 31st, down from a closing value of 16,209.13 at the end of December.

AVIATION

The Globe and Mail. 8 Feb 2018. Ottawa orders review of deal to sell helicopters to Philippine military
STEVEN CHASE, With a report from Reuters

I have the power to deny a permit if I feel that it poses a risk to human rights, and I am prepared to do so.

CHRYSTIA FREELAND, FOREIGN AFFAIRS MINISTER

The federal government has ordered a review of Canada’s deal to sell helicopters to the Philippine military amid rising concerns about supplying armed forces that have been accused of unlawful killings in the Asian country.

Foreign Affairs Minister Chrystia Freeland said she is prepared to block the export of the aircraft if necessary, and expressed serious misgivings about human-rights violations under the Duterte government in the Philippines.

International Trade Minister François-Philippe Champagne told reporters the review was prompted by comments from a Filipino military officer regarding the intended use of these equipment.

Philippines Brigadier-General Restituto Padilla, military chief of plans, told media on Tuesday, the day that news of the deal was released, that the helicopters

“will be used for the military’s internal security operations.”

The federal government did not immediately answer questions on when the deal was reached. A Global

Affairs spokeswoman had told reporters this week that Canada was under the impression the helicopters would be used for “disaster relief, search and rescue, passenger transport and utility transport.”

The Philippine military has said the helicopters might also be used for these humanitarian purposes. The Liberal government was on the defensive earlier this week over why Ottawa would allow a deal with the Philippines’ armed forces after Prime Minister Justin Trudeau voiced concerns over human-rights abuses by the country’s security forces. Mr. Trudeau drew international headlines last November after he raised the matter of extrajudicial killing with Philippine President Rodrigo Duterte at an international summit in Manila. Mr. Duterte later lashed out publicly at Mr. Trudeau, calling foreign questioning of the matter “a personal and official insult.”

The deal for 16 choppers, brokered by the Canadian Commercial Corp., a Crown corporation, is worth more than US$233.36-million.

The helicopters are produced by Bell Helicopter in Mirabel, Que. The federal riding of Mirabel is held by the Bloc Québécois.

No export permits yet have been issued in the Philippines deal.

Mr. Champagne told reporters that the government has not approved any permits and none had been sought. He said he is asking the Crown corporation to review the contract immediately.

Most export permits are approved by the Global Affairs bureaucracy, and only a small fraction each year are sent to the foreign affairs minister for a decision, usually because there is disagreement within the civil service or the deal is controversial.

Ms. Freeland vowed in the Commons to investigate this deal.

“The Prime Minister and I have been very clear about the Duterte regime’s human-rights violations and extrajudicial killings including while [we visited] the Philippines. I will conduct an extremely rigorous human rights analysis of any potential export permit application related to this contract,” Ms. Freeland said.

“I have the power to deny a permit if I feel that it poses a risk to human rights, and I am prepared to do so.”

Mr. Champagne said this deal was made in accordance with the terms of an agreement between Canada and the Philippines in 2012, when the Harper government was in power.

The deal was announced as the Philippines military prepares to step up operations against Islamist and Communist rebels.

Arms-control advocates question why the Trudeau government is helping equip the military of a country in which death squads have carried out unlawful or unauthorized killings for years – activities that have prompted concern at the highest levels in Ottawa.

Cesar Jaramillo, executive director of Project Ploughshares, a disarmament group that is an agency of the Canadian Council of Churches, said the deal reveals weaknesses in Canada’s arms-control system.

“The notion that the Philippine military intends to use the helicopters for internal security operations is not at all surprising,” he said.

“The comments from the Philippine military about the intended use of the helicopters simply confirm the type of risks involved that a rigorous export controls regime should detect.”

The arms-control advocate noted the difference in how the Trudeau government has handled two arms deals.

In the case of a $15-billion Saudi arms deal reached by the Harper government, the Liberals said that they could not break a contract, Mr. Jaramillo said, adding that they appear more flexible in a much smaller deal.

“It is somewhat striking that a single comment from the Philippine military prompted the announcement of this review one day later, while the multibillion-dollar Saudi arms deal has withstood years of concrete red flags about the overriding risk that Canadian equipment might be misused there,” he said.

Last November, Mr. Trudeau told Canadians he personally pressed Mr. Duterte on human rights.

“As I mentioned to President Duterte, we’re concerned with human rights, with the extrajudicial killings,” Mr. Trudeau said at the time. The Prime Minister said Canada has “a reputation for being able to have strong and frank, sometimes firm, discussions around the rule of law and human rights with its partners.”

Under the deal, the Bell 412EPI helicopters are to be delivered early next year as Mr. Duterte refocuses the armed forces modernization program to tackle growing domestic threats as Maoist fighters and pro-Islamic State extremists try to regroup.

According to Human Rights Watch, since taking office in 2016, Mr. Duterte has carried out a “war on drugs” in which more than 7,000 suspected drug dealers and addicts have been killed.

Cases investigated by the media and rights groups “invariably found unlawful executions by police or agents of the police typically acting as death squads,” Human Rights Watch says.

The Globe and Mail. 8 Feb 2018. EDITORIAL. No arms for Duterte

It’s not known exactly what Prime Minister Justin Trudeau said to Rodrigo Duterte in the wings of an international summit in Manila last November. What we do know is the Philippine president took his Canadian visitor’s comments – about the rampant humanrights violations and mass extrajudicial killings associated with Mr. Duterte’s ruthless crackdown on drugs – as a personal affront, because he said as much afterward.

It was one of Mr. Trudeau’s better moments as PM. Three months later, his government is facilitating the sale of Canadian-built combat helicopters to Mr. Duterte’s regime.

It is hard to understand the Trudeau government’s thinking. It was badly burned by its decision to allow the sale of Canadian-made armoured vehicles to Saudi Arabia, in spite of concerns that a country with a terrible human-rights record might turn those weapons on its own people.

Those worries turned out to be well-founded, and Ottawa says it is reviewing an incident in which Canadian military vehicles appear to have been used against Saudi citizens. And yet now it is selling arms to Mr. Duterte?

It boggles the mind. We’re talking about a would-be strongman who oversees death squads that Human Rights Watch says have murdered as many as 12,000 people, including children.

Mr. Duterte’s loyalists have imprisoned his political opponents, executed journalists, and harassed and threatened workers from international humanitarian organizations.

And yet Mr. Duterte can apparently count on the Canadian government to help deliver 16 combat helicopters worth some $300-million, a contract that stands to benefit several companies in Quebec, the Prime Minister’s home province.

The Philippines promised the aircraft would be used for disaster relief and rescue operations, but that was always hard to believe – even before officials there conceded the machines could be used for “internal security operations.”

Ottawa announced Wednesday that, in light of that revelation, it will conduct a review of the sale.

We can save them the time and trouble. Scuttle the deal – Canada doesn’t need Mr. Duterte’s business.

The Globe and Mail.  REUTERS. 8 Feb 2018. Boeing says ‘key issues’ remain in Embraer talks
TIM HEPHER, SINGAPORE
BRAD HAYNES, REUTERS, SAO PAULO

Boeing Co. said on Wednesday there are still issues to address before a partnership can be agreed with Brazil’s Embraer SA, stressing the price must make sense as outlines emerged of a deal that may give the U.S. plane maker control of the Brazilian E-Jet program.

“Our talks continue to advance in a productive manner, but there are key issues that remain,” said Phil Musser, senior vice-president of communications. “… This is a winning combination, but it is not a ‘must do’ for Boeing. The final terms – and price – need to provide the best value for our respective customers, investors and countries, to provide an optimal platform for success.”

Reuters reported on Friday that Boeing was now seeking approval in Brasilia for a plan to create a joint company encompassing Embraer’s executive-jet and commercial-jet operations, including the 70- to 130-seat E-Jets. Two people familiar with the discussions said the two sides were moving toward a structure granting Boeing operational control and a 90-per-cent stake in the new entity, which would exclude Embraer’s defence operations but include business jets.

BOEING (BA) CLOSE: US$348.12, UP US$7.06

REUTERS. FEBRUARY 7, 2018 / 5:26 AM / A DAY AGO
Embraer 'harmed party' in Boeing-Bombardier trade dispute: Brazilian jetmaker executive
Reuters Staff

2 MIN READ

SINGAPORE (Reuters) - Embraer SA (EMBR3.SA) was the “harmed party” in the trade fight between Boeing Co (BA.N) and Bombardier Inc (BBDb.TO), the Brazilian jetmaker’s commercial aviation boss said on Wednesday.

Embraer's commercial aviation chief John Slattery talks to Reuters during the International Air Transport Association (IATA) meeting in Cancun, Mexico June 5, 2017. REUTERS/Victor Ruiz Garcia
The U.S. trade commission last month handed an unexpected victory to Bombardier against Boeing, in a ruling that allows the Canadian company to sell its newest jets to U.S. airlines without heavy duties.

Embraer SA
21.75
EMBR3.SASAO PAULO STOCK EXCHANGE
+0.06(+0.28%)
EMBR3.SA

EMBR3.SABA.NBBDb.TO

Embraer, a more direct competitor to Bombardier in the market for smaller passenger jets, is backing a separate Brazilian government complaint against Canada at the World Trade Organization, Embraer Commercial Aviation CEO John Slattery said.

“We were the harmed party,” he told Reuters at the Singapore Airshow. “Illegal subsidies were given both by the federal government and the state of Quebec to Bombardier. In addition to that Bombardier sold the aircraft in the North American market below cost.”

Reporting by Jamie Freed and Tim HepherEditing by Muralikumar Anantharaman

DAIRY

Agriculture and Agri-Food Canada. February 7, 2018. Government of Canada Supports a Strong and Competitive Canadian Dairy Sector

Ottawa, Ontario – The dairy sector is an important contributor to Canada's economy. Canada's dairy sector drives our economy with nearly $24 billion in sales by farmers and food processors. Canada's dairy farmers' prosperity helps ensure Canadian families continue to benefit from high-quality products, and helps create good, well-paying jobs for Canadians.

Speaking today at the Dairy Farmers of Canada annual policy conference, Minister of Agriculture and Agri-Food Lawrence MacAulay, highlighted the importance of a strong and competitive dairy industry and provided participants an update on the Dairy Farm Investment Program (DFIP) – the $250 million federal program announced on August 1, 2017. The Minister announced that to date, over 500 dairy producers have been approved for funding support valued at over $23.5 million, in a wide array of projects from small investments in cow comfort equipment to large ones for automated milking systems.

Applications under the associated $100 million Dairy Processing Investment Fund are under review and projects under this program will be announced shortly.


Quotes

"The Government of Canada is committed to improving farm productivity and efficiency.  The fact that a majority of applicants will have at least one of their projects supported under the Dairy Farm Investment Program is great news for Canada's dairy producers right across the country. These investments are just one of the many ways the Government continues to support the dairy sector to ensure it remains strong."

- Minister MacAulay

Quick Facts

• The Dairy Farm Investment Program is a $250 million over five years federal investment that is providing targeted contributions to help Canadian dairy farmers update farm technologies and systems and improve productivity through upgrades to their equipment.
• The sector showed strong interest in the DFIP, submitting more than 2,500 applications.
• Phase one of the program provides funding support in the first three years (2017 – 2020), while the second phase will cover the last two years (2020-2022) of the five-year program.
• For this second phase, priority will be given to producers who did not receive funding in the first round. Producers whose projects are not funded in phase one will be encouraged to re-apply for the second phase.
• Applicants to the Program have received status update letters on their applications. AAFC officials continue to carefully review each application in the order received.

Dairy Farm Investment Program:
Dairy Processing Investment Fund:

IT

Services Canada. 2018-02-07. Cloud Computing

Easier access to federal services for Canadians – Public cloud now available

The Government of Canada is committed to building a modern, reliable, and secure information technology (IT) platform for the delivery of programs and services to Canadians. Today, the Honourable Carla Qualtrough, Minister of Public Services and Procurement and minister responsible for Shared Services Canada, announced that Shared Services Canada (SSC) is now offering public cloud computing services for the Government of Canada.

Open government is good government, and these new cloud services will benefit Canadians and their families by increasing access to government data and services. Immediate uses for public cloud services that handle unclassified data could include storing publicly accessible digital collections, such as archival material. It could also enable the analysis of scientific unclassified data sets that are too large to be processed by traditional applications.

Being open also means working with industry experts to reach the best outcomes. As a cloud broker, SSC will work with federal departments to help them select the right solution for their needs from a wide range of cloud services and providers.

Quotes

“These cloud services bring an exciting new era in how federal services and programs will be delivered to Canadians. The cloud will allow the Government of Canada to harness the innovation of private-sector providers to make its information technology more agile. Cloud services will make it easier for Canadians to access new digital services and programs such as geospatial systems which support our scientists and city planners.”

The Honourable Carla Qualtrough, Minister of Public Services and Procurement and minister responsible for Shared Services Canada

“Modern IT infrastructure is the backbone of better digital service delivery. Responding quickly to the changing needs of Canadians while constantly improving Government of Canada services requires new, agile, Cloud-based solutions.”

The Honourable Scott Brison, President of the Treasury Board of Canada

Quick Facts

• The collaborative procurement process for cloud services resulted in 22 contract awards. Cloud services put in place via these contracts are for unclassified data only.
• The information stored on the cloud provides open data to governments, researchers, businesses and Canadians. This data has a variety of uses including emergency response, conservation, transportation, establishing property rights to consumers’ social networking, and tourism.
• Cloud computing services will be provided on an as-needed basis, allowing the cost of services to be tailored to federal organizations’ needs.
• A separate procurement process for cloud services to handle higher data security requirements will be held at a later date.
• The announcement was made at the Cloud First Day event hosted by the Treasury Board of Canada Secretariat. The event brought together leaders from government and industry sectors to share their cloud experiences and best practices.
• Invitation to Qualify for the Procurement Process for Public Cloud Services

Backgrounder

The Government of Canada (GC) is using private-sector innovation and creativity to respond to the increasing demand for information technology (IT) services and capacity. The use of cloud services will help create the modern infrastructure required for the delivery of programs and services to Canadians.

Cloud computing is the delivery of computing services — servers, storage, databases, networking, software, analytics, and more — over the Internet. Companies offering these services are called cloud providers and typically charge for services based on demand.

These new tools will improve services to Canadians by increasing the responsiveness, flexibility and value for money of the applications used to deliver programs and services. The GC’s first set of cloud services will handle unclassified data only, which can include storing publicly accessible collections, such as archived material, government-generated open data, and big data sets generated by the scientific community.

These types of cloud services will also provide safe environments to allow developers to create new IT applications. For instance, the Correctional Services of Canada uses it to manage technical services and facilities at institutions across Canada. This contract demonstrates the effectiveness of using cloud services in government. The GC will build on this success, which targets unclassified information only.

SSC’s customers in federal organizations now have access to a wide and flexible range of capabilities. They can choose to use cloud computing to process, manage or store data.

So far, SSC has awarded 22 contracts for public cloud computing services, and more will follow.  In collaboration with Treasury Board Secretariat, SSC will act as a cloud broker. This means SSC will:

• work with departments and agencies to help them select the right solution for their needs
• provide consistent security and operations
• provide IT stewardship, and
• leverage the buying power of the Government of Canada

________________

LGCJ.: