CANADA ECONOMICS

TPP

GLOBAL AFFAIRS. Recent statements of the Honourable François-Philippe Champagne, Minister of International Trade, in the House of Commons

2018-02-15

Mr. Speaker, I thank the member for her hard work on the committee.
This morning I informed the committee, and she will recall, that for the first time, the TPP will have an enforceable chapter for labour and the environment. This is a great achievement for Canada. This is something that this government realized, because we improved on the texts that were left by the Conservative government.
This agreement, as the member will know, will open up a market of 495 million people, 14% of the world economy. We should all be proud that we are opening markets that will provide prosperity for Canadians from coast to coast.

2018-02-15

Mr. Speaker, I thank my colleague for her question. Canadians want an ambitious trade agenda that does not sacrifice the environment or workers. That is why the trans-Pacific partnership includes chapters on the environment and workers' rights that can be strengthened. I think the member should be happy that, for once, we stood up for workers in Canada and we will continue to do so in all of our trade agreements.

2018-02-13

Mr. Speaker, as the member has said, this is a good agreement on Agriculture Day. We should all celebrate in the House that this is going to be good for our country. Thanks to the Prime Minister, we will be signing the CPTPP in March, and we will proceed with ratification.

However, let me again say what this entails for Canadians. We have opened up a market of more than 500 million people, 40% of the world economy. This is a great day for agriculture. This is a great day for Canada. Thanks to the Prime Minister, we will have our position in the Asia Pacific region.

The Globe and Mail. 16 Feb 2018. Liberals won’t sacrifice labour rights in free-trade talks with China: minister

STEVEN CHASE

ROBERT FIFE

OTTAWA - Canada’s International Trade Minister is drawing a line in the sand on the scope of free-trade talks with China, saying the Liberal government will not relent on its intention to address labour rights in a future deal as part of a “progressive” negotiating agenda.

Efforts to launch official freetrade talks went off the rails late last year during a visit by Prime Minister Justin Trudeau to Beijing and both countries have been discussing how they could get back on track.

International Trade Minister François-Philippe Champagne told the Commons trade committee on Thursday the government is talking to China, but is not prepared to sacrifice principles.

“I think Canadians expect us to open markets, but not at the expense of the environment, not at the expense of labour rights and not at the expense of making sure women and men will have an equal chance in trade,” Mr. Champagne told MPs on the Standing Committee in International Trade.

“We’re going to engage with China with our eyes wide open – with our timetable and according to our principles.”

Mr. Trudeau came home empty-handed from Beijing last December after Chinese balked at Canada’s demand to include labour standards in negotiations. Canada has been pushing to address labour standards, environmental standards and gender rights in any agreement.

China’s consul-general in Vancouver, Tong Xiaoling, later in December told a news conference her country was not keen on including items in a trade deal that it considers not relevant to a commercial pact.

“We object to the addition of other political conditions into the discussions of a free-trade agreement,” Ms. Tong said on Dec. 19, according to a report in the publication Business in Vancouver.

“China has situations unique to China; it has its own history and culture. So our development as a country bears the marks of our own historical contexts. Therefore, in any negotiations with another country, we have our principles that present a baseline that we cannot cross. We are not going to change our principles or soften our position for the completion of a freetrade deal, and we reject the use of political conditions as bargaining chips in a negotiation for an economic agreement.”

Two senior representatives from China’s Communist Party recently conducted high-level talks with senior Trudeau cabinet ministers and federal officials to broaden relations and resume efforts to proceed with formal free-trade negotiations between Beijing and Ottawa.

Finance Minister Bill Morneau spent time at the World Economic Forum in the Swiss Alps last month with Liu He, a trusted confidant and top economic adviser to Chinese President Xi Jinping.

At the same time, the Communist Party’s top diplomat – an important role in the one-party state – paid a visit to Canada.

Song Tao, head of the Communist Party’s international liaison department, in January met Mr. Champagne and Daniel Jean, the national security adviser to Justin Trudeau, as well as other senior advisers in the Prime Minister’s Office. As head of the Communist Party’s foreign affairs office, Mr. Tao is in charge of dealing with other communist parties in countries from North Korea to Vietnam to Laos and Cuba. But his portfolio has expanded more recently.

CANADA - INDIA

PM. Itinerary for Friday, February 16, 2018 Ottawa, Ontario - February 15, 2018

Note: All times local

Itinerary for the Prime Minister, Justin Trudeau, for Friday, February 16, 2018:

Ottawa, Ontario

12 p.m. The Prime Minister and Ms. Grégoire Trudeau will depart for New Delhi, India.

Canada Reception Centre (Hangar 11)

Macdonald-Cartier International Airport

Note for media:

Photo opportunity of departure

The Globe and Mail. 16 Feb 2018. Trudeau must make haste on trade with India

COLIN ROBERTSON, A former diplomat, vice-president and fellow at the Canadian Global Affairs Institute

While Prime Minister Justin Trudeau’s visit to India this week will reinforce our growing people-to-people ties, Canada and India are still some distance from long-promised deals on foreign investment and closer economic ties.

Prime Minister Justin Trudeau’s visit to India this week will reinforce and underline our growing people-to-people ties. The economic relationship is less buoyant, but if Indian Prime Minister Narenda Modi can deliver on his promised domestic reforms, there is the potential for more two-way trade and investment.

With stops in Agra, Amritsar, Ahmedabad, Mumbai, as well as New Delhi, it will be a rare session that does not include some reference to family living or studying in Canada.

The Indian diaspora includes several members in the Canadian Parliament, with four members in the Trudeau cabinet. Nearly 4 per cent of Canadians claim Indian decent, with 40,000 Indians migrating to Canada last year. The 124,000 Indians studying in Canada are our second-largest group of foreign students. No surprise that tourism is also on the rise, with more than 210,000 Indians visiting Canada last year. There are daily and non-stop flights.

India definitely deserves Canadian attention.

India will soon surpass China in population, with one-sixth of humanity. It is also the world’s largest democracy, which is a cacophony of caste and creeds. The two Prime Ministers will empathize over the challenges of managing federations with strong sectional and regional pressures. Some of these, such as the Sikh separatist movement, play into Canadian affairs.

At the World Economic Forum in Davos last month, Mr. Modi was forceful in his embrace of globalization. He described his “New India” reform agenda and its pillars of structural reform: technological governance; physical infrastructure; business facilitation; and inclusive development. Designed to give “good administration and better amenities,” Canada needs to identify the niche opportunities within each pillar.

Trade and investment will figure in every discussion. Investment from Canadian pension funds in real estate and other sectors has picked up in the past couple of years.

With its steady GDP growth, India is expected to become the third-largest consumer market by 2025.

But Canada and India are still some distance from long-promised deals on foreign investment and closer economic relations.

The foreign-investment protection agreement negotiated by the Paul Martin and Stephen Harper governments that was concluded in 2007 has yet to be implemented. Free-trade negotiations began in 2010. The six-month “road map” to its achievement, that Mr. Harper and Mr. Modi enthused about during the Indian Prime Minister’s Canadian visit in April, 2015, has yet to materialize.

Much of the problem lies, as the World Bank consistently reports, with India’s trade restrictiveness. Mr. Modi talks a good show on reform and, while he is making some progress, the structural impediments are deep and entrenched.

There is also, notwithstanding Mr. Modi’s declaration in Davos, Indian protectionism.

The imposition late last year of a 50-per-cent import tariff on peas and a 30-per-cent tariff on chickpeas and lentils should be high on Mr. Trudeau’s discussions with Mr. Modi. Agricultural sales to India are a major market, especially for Prairie farmers.

Mr. Trudeau will likely get a receptive hearing on climate and the progressive trade agenda that can be parleyed into useful initiatives.

Mr. Modi will raise Indo-Pacific security and likely ask about Canadian capacity and capabilities. Indian policy under Mr. Modi has shifted from “Look East” to “Act East.” His “Neighbourhood First” policy is roughly analogous to the Trudeau government’s new “Strong, Secure, Engaged” defence policy. At last month’s Association of Southeast Asian Nations forum, there were discussions about the “congagement” – containment and engagement – of China. Mr. Trudeau should listen to Mr. Modi’s perspective.

With the Trans-Pacific Partnership now a reality and likely to be implemented later this year, our trade in the Pacific will only increase. It will oblige more attention and commitment to Indo-Pacific security.

The tempo of Indo-Pacific activity by our Esquimalt-based warships has picked up. HMCS Chicoutimi, one of our Victoriaclass submarines, is completing a nearly six month successful Pacific exercise that also took it to Japan. If we want to be seen as a serious Indo-Pacific partner, the current tempo will be seen as the bare minimum.

Mr. Trudeau’s India visit is his longest yet to a single country. The Indian backdrop will provide a spectacular picturesque travelogue against a celebration of family ties. But real success will also require serious and continuing conversations on trade and security.

INTERNATIONAL TRADE

USDoC. 02/16/2018. Secretary Ross Releases Steel and Aluminum 232 Reports in Coordination with White House

Today, Secretary Wilbur Ross released reports on the U.S. Department of Commerce’s investigations into the impact on our national security from imports of steel mill products and from imports of wrought and unwrought aluminum. These investigations were carried out under Section 232 of the Trade Expansion Act of 1962, as amended. All classified and business confidential information in the reports was redacted before the release.

“I am glad that we were able to provide this analysis and these recommendations to the President,” said Secretary Ross. “I look forward to his decision on any potential course of action.”

The Department of Commerce found that the quantities and circumstances of steel and aluminum imports “threaten to impair the national security,” as defined by Section 232.

The reports are currently under consideration by the President, and no final decisions have been made with regard to their contents. The President may take a range of actions, or no action, based on the analysis and recommendations provided in the reports. Action could include making modifications to the courses of action proposed, such as adjusting percentages.

The President is required to make a decision on the steel recommendations by April 11, 2018, and on the aluminum recommendations by April 19, 2018.

Key Findings of the Steel Report:

• The United States is the world’s largest importer of steel. Our imports are nearly four times our exports.
• Six basic oxygen furnaces and four electric furnaces have closed since 2000 and employment has dropped by 35% since 1998.
• World steelmaking capacity is 2.4 billion metric tons, up 127% from 2000, while steel demand grew at a slower rate.
• The recent global excess capacity is 700 million tons, almost 7 times the annual total of U.S. steel consumption. China is by far the largest producer and exporter of steel, and the largest source of excess steel capacity. Their excess capacity alone exceeds the total U.S. steel-making capacity.
• On an average month, China produces nearly as much steel as the U.S. does in a year. For certain types of steel, such as for electrical transformers, only one U.S. producer remains.
• As of February 15, 2018, the U.S. had 169 antidumping and countervailing duty orders in place on steel, of which 29 are against China, and there are 25 ongoing investigations.

Recommendations of the Steel Report:

Secretary Ross has recommended to the President that he consider the following alternative remedies to address the problem of steel imports:

1. A global tariff of at least 24% on all steel imports from all countries, or
2. A tariff of at least 53% on all steel imports from 12 countries (Brazil, China, Costa Rica, Egypt, India, Malaysia, Republic of Korea, Russia, South Africa, Thailand, Turkey and Vietnam) with a quota by product on steel imports from all other countries equal to 100% of their 2017 exports to the United States, or
3. A quota on all steel products from all countries equal to 63% of each country’s 2017 exports to the United States.

Each of these remedies is intended to increase domestic steel production from its present 73% of capacity to approximately an 80% operating rate, the minimum rate needed for the long-term viability of the industry. Each remedy applies measures to all countries and all steel products to prevent circumvention.

The tariffs and quotas would be in addition to any duties already in place. The report recommends that a process be put in place to allow the Secretary to grant requests from U.S. companies to exclude specific products if the U.S. lacks sufficient domestic capacity or for national security considerations. Any exclusions granted could result in changed tariffs or quotas for the remaining products to maintain the overall effect.

Steel Report: https://www.commerce.gov/sites/commerce.gov/files/the_effect_of_imports_of_steel_on_the_national_security_-_with_redactions_-_20180111.pdf

Key Findings of the Aluminum Report:

• Aluminum imports have risen to 90% of total demand for primary aluminum, up from 66% in 2012.
• From 2013 to 2016 aluminum industry employment fell by 58%, 6 smelters shut down, and only two of the remaining 5 smelters are operating at capacity, even though demand has grown considerably.
• At today’s reduced military spending, military consumption of aluminum is a small percentage of total consumption and therefore is insufficient by itself to preserve the viability of the smelters. For example, there is only one remaining U.S. producer of the high-quality aluminum alloy needed for military aerospace. Infrastructure, which is necessary for our economic security, is a major use of aluminum.
• The Commerce Department has recently brought trade cases to try to address the dumping of aluminum. As of February 15, 2018, the U.S. had two antidumping and countervailing duty orders in place on aluminum, both against China, and there are four ongoing investigations against China.

Recommendations of the Aluminum Report:

Secretary Ross has recommended to President Trump three alternative remedies for dealing with the excessive imports of aluminum. These would cover both aluminum ingots and a wide variety of aluminum products.

1. A tariff of at least 7.7% on all aluminum exports from all countries, or
2. A tariff of 23.6% on all products from China, Hong Kong, Russia, Venezuela and Vietnam. All the other countries would be subject to quotas equal to 100% of their 2017 exports to the United States, or
3. A quota on all imports from all countries equal to a maximum of 86.7% of their 2017 exports to the United States.

Each of the three proposals is intended to raise production of aluminum from the present 48% average capacity to 80%, a level that would provide the industry with long-term viability. Each remedy applies measures to all countries and all steel products to prevent circumvention.

The tariffs and quotas would be in addition to any duties already in place. The report recommends that a process be put in place to allow the Secretary to grant requests from U.S. companies to exclude specific products if the U.S. lacks sufficient domestic capacity or for national security considerations. Any exclusions granted could result in changed tariffs or quotas for the remaining products to maintain the overall effect.

Aluminum Report: https://www.commerce.gov/sites/commerce.gov/files/the_effect_of_imports_of_aluminum_on_the_national_security_-_with_redactions_-_20180117.pdf

BLOOMBERG. 16 February 2018. U.S. Commerce Wants Aluminum Tariff-Quota on Imports

By  Joe Deaux and Andrew Mayeda

Shares in U.S. aluminum and steel companies from Alcoa Corp. to Nucor Corp. surged after the U.S. Commerce Department recommended that President Donald Trump impose a range of restrictions on imports from tariffs to quotas.

In a briefing with reporters on Friday over the results of his department’s investigation, Commerce Secretary Wilbur Ross proposed a 24 percent global tariff on steel shipments coming into the U.S. and a 7.7 percent duty on aluminum imports. Trump has the latitude to choose between these types of options or even enter talks with producers to find solutions.

The recommendations pushed up Century Aluminum Co. as much as 11 percent, while Alcoa gained 5.5 percent. Aluminum on the London Metal Exchange rose as much as 2.4 percent as of 5:15 p.m. in London. Among steelmakers, Nucor, the largest American producer, climbed almost 6 percent, the biggest intraday increase since November 2016. U.S. Steel Corp. advanced 13 percent, the most since November.

Trump instructed the Commerce Department last year to probe whether imports of steel and aluminum represent a threat to U.S. national security. The investigation took place under the seldom-used Section 232 of the Trade Expansion Act of 1962. Commerce Secretary Wilbur Ross last month submitted his department’s final reports to Trump on steel and aluminum. The president now has until about mid-April to decide on any potential action.

Imposing tariffs on such widely used commodities may trigger retaliatory measures from China, the world’s biggest producer of steel and aluminum. It could also inflate manufacturing and consumer prices in the U.S., and inflame tensions with allies such as Japan, India, Germany and Canada. Group of 20 economies have pushed back against the threat of steel tariffs, warning such a move could set off a trade war.

Ross also outlined the following alternatives for the president to consider:

• At least a 53 percent tariff on steel imports from Brazil, China, Costa Rica, Egypt, India, Malaysia, Korea, Russia, South Africa, Thailand, Turkey, Vietnam, with a quota by product on steel imports from all other countries equal to 100 percent of their 2017 exports to the U.S.
• Quota on steel imports from all countries up to 63 percent of their 2017 exports to the U.S.
• For aluminum, a 23.6 percent tariff on metal when it comes from China, Russia, Venezuela and Vietnam and Hong Kong
• An aluminum quota of 86.7 percent of 2017 exports

Trump is facing resistance to tariffs from lawmakers in his own party. At a meeting this week at the White House, at least seven Republican lawmakers argued against any action that might set off a tit-for-tat response from China or other countries.

Trump said the U.S. steel and aluminum industries “are being decimated by dumping and from many countries.” The administration is now considering “all options, and part of the options would be tariffs,” he told lawmakers at the meeting. Such measures would encourage steel and aluminum producers to come back to the U.S., he said. Some companies in the steel industry, as well as unions such as United Steelworkers, have been pushing the president to come down hard on imports.

Speculation about possible U.S. action has roiled the metals industry. Imports of steel increasing last year on anticipation that new tariffs would elevate costs.

MANUFACTURING

StatCan. 2018-02-16. Monthly Survey of Manufacturing, December 2017

• Manufacturing sales: $55.5 billion; December 2017; -0.3% decrease (monthly change)
• Inventories: $75.3 billion; December 2017; 0.1% increase (monthly change)
• Inventory-to-sales ratio: 1.36; December 2017; 0.01 pts increase (monthly change)
• Unfilled orders: $86.0 billion; December 2017; -0.7% decrease (monthly change)
• Source(s): CANSIM table 304-0014: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=3040014&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=

Manufacturing sales declined 0.3% to $55.5 billion in December, following a revised increase of 3.8% in November. The decline was mainly the result of lower sales in the petroleum and coal products industry and the food manufacturing industry.

Overall, sales were down in 11 of 21 industries, representing 57.0% of the manufacturing sector. Sales of non-durable goods decreased 1.3%, while sales of durable goods rose 0.7%.

Chart 1: Manufacturing sales decline

Once the effects of price changes are taken into account, manufacturing sales in volume terms edged down 0.1% in December.

Petroleum and coal products and food industries post the largest declines

Following five consecutive monthly increases, sales in the petroleum and coal product industry fell 4.1% to $5.7 billion in December, mostly reflecting lower volumes. After removing price effects, sales volumes of petroleum and coal products were down 3.5%.

Sales in the food industry were down 2.6% to $8.5 billion, following a 3.6% increase in November, which was the largest monthly increase in dollars since October 2013. The declines in the food industry were most pronounced in the meat product industry as well as in the dairy product industry.

Sales in current dollars also decreased in the primary metal (-2.0%) and fabricated metal product (-2.3%) industries. Both industries reported sales increases the previous two months. In constant dollars, volumes sold declined by 1.8% and 2.3% respectively in these industries in December.

These declines in current dollars were partially offset by increases in the motor vehicle (+2.6%), machinery (+3.0%), computer and electronic product (+7.4%) and aerospace product and parts (+4.2%) industries.

Sales down in seven provinces

Sales were down in seven provinces in December. New Brunswick and Quebec reported the largest declines, which were partly offset by higher sales in Ontario and Alberta.

Following four consecutive monthly increases, New Brunswick posted the largest decline in dollar terms in December (down 9.2% to $1.7 billion), largely due to lower sales of non-durable goods.

Sales in Quebec declined 1.1% to $13.2 billion, following a 1.5% increase in November. The decline was mostly attributable to lower sales in the primary metal industry (-8.9%), as well as the food industry (-4.2%). These decreases were partly offset by higher sales in the petroleum and coal product industry and the beverage and tobacco product industry.

Sales in Ontario increased 1.2% to $25.7 billion in December. This was the second consecutive month where Ontario recorded the largest monthly gain among the provinces, and was led by higher sales in the transportation equipment (+1.6%), machinery (+5.2%) and primary metal (+4.4%) industries.

In Alberta, sales rose 1.2% to $6.2 billion, the fifth straight monthly increase. Sales were up in 11 of 21 industries, led by the petroleum and coal products (+3.9%), machinery (+6.4%) and primary metal (+14.4%) industries.

Inventory levels edge up

Inventory levels edged up 0.1% from November to $75.3 billion in December. Inventories rose in 8 of the 21 industries, led by the petroleum and coal products (+4.9%) and the other transportation equipment (+10.4%) industries. These gains were partially offset by lower inventories in the railroad rolling stock industry and fabricated metal product industry.

Chart 2: Inventory levels edge up

The inventory-to-sales ratio rose from 1.35 in November to 1.36 in December. The inventory-to-sales ratio measures the time, in months, that would be required to exhaust inventories if sales were to remain at their current level.

Chart 3: The inventory-to-sales ratio increases

Unfilled orders decline

Unfilled orders fell 0.7% to $86.0 billion in December, the second consecutive monthly decline. The decrease in December was mainly due to a drop in unfilled orders in the aerospace product and parts industry, as well as the other transportation equipment industry.

Chart 4: Unfilled orders decline

New orders were up 0.3% to $54.9 billion in December, following a 2.3% decline in November.

Manufacturing sales rebound in the fourth quarter

Following a 1.8% decrease in the third quarter, manufacturing sales rose 2.8% to $164.8 billion in the fourth quarter, partly on higher sales of petroleum and coal products (+13.1%), mostly due to higher prices. Prices for petroleum and coal products, as measured by the Industrial Product Price Index, increased 9.2% in the fourth quarter of 2017 compared with the previous quarter.

In real (or volume) terms, quarterly sales increased 1.1% to $143.0 billion on higher sales of petroleum and coal products (+3.9%).

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/180216/dq180216a-eng.pdf

THE GLOBE AND MAIL. THE CANADIAN PRESS. FEBRUARY 16, 2018. December’s manufacturing sales slip from November’s record high

OTTAWA - Canada's manufacturing sales in December were $55.5-billion, which was down 0.3 per cent from a revised record high for November, Statistics Canada reported Friday.

"The surge in November, related to a rebound in automotive shipments after the October shutdowns, was not expected to continue through the year-end," TD economist Michael Dolega wrote Friday.

Nevertheless, he said December was "still somewhat disappointing" with 11 of 21 manufacturing industries reporting declines and volumes down 0.1 per cent after adjusting for price changes.

The petroleum and coal product industry dropped 4.1 per cent to $5.7-billion in December, after five consecutive increases, Statistics Canada reported.

Food industry sales – the second-largest category tracked by the federal agency – dropped 2.6 per cent to $8.5-billion after the strongest November in years.

That was partly offset by a 1.3 per cent increase in transportation equipment, which rose to $10.7-billion – including $5.3-billion from motor vehicles and $2.59-billion from motor vehicle parts.

Sales were down in seven provinces including Quebec, which saw a 1.1 per cent decline to $13.2-billion. Ontario's manufacturing sales were up 1.2 per cent to $25.7-billion while Alberta sales rose 1.2 per cent to $6.2-billion.

For the fourth quarter ended in December, manufacturing sales were up 2.8 per cent at $164.8-billion, including price increases. In volume terms, quarterly sales were up 1.1 per cent to $143.0-billion.

"On the whole, we remain cautiously optimistic for the Canadian manufacturing sector," Dolega wrote.

He pointed to two contrary forces that will likely be at play: the positive stimulative effect of U.S. tax reform, and the negative effect of protectionist sentiment and uncertain trade talks between the United States, Canada and Mexico.

Statistics Canada will release further data next week that will shed more light on fourth-quarter economic performance. The December wholesale trade report comes on Tuesday and December retail trade on Thursday.

Its report on Canada's gross domestic product for the fourth quarter will be issued March 2.

REUTERS. FEBRUARY 16, 2018. Canada December factory sales slip 0.3 percent after huge jump in November

OTTAWA (Reuters) - Canadian factory sales slipped in December after recording a huge jump in November, pulled down by weakness in petroleum and coal products as well as food manufacturing, Statistics Canada said on Friday.

Analysts in a Reuters poll had forecast a 0.2 percent gain. Statscan revised November’s gain to 3.8 percent, the biggest advance since the 5.0 percent leap seen in July 2009.


Sales edged down 0.3 percent to C$55.52 billion ($44.42 billion) on declines in 11 of 21 industries, representing 57 percent of the manufacturing sector. Volumes fell by 0.1 percent.

Sales in the petroleum and coal product industry fell 4.1 percent after five consecutive month-on-month increases while food industry sales dropped by 2.6 percent on weakness in the meat product and dairy product industries.

New orders were up by 0.3 percent while unfilled orders fell by 0.7 percent, the second monthly drop in a row, on lower demand in the aerospace products and parts industry.

($1=$1.25 Canadian)

Reporting by David LjunggrenEditing by Chizu Nomiyama

INFLATION

BANK OF CANADA. February 15, 2018. Anchoring Expectations: Canada’s Approach to Price Stability. Remarks. Lawrence Schembri, Deputy Governor. Manitoba Association for Business Economists. Winnipeg, Manitoba

Introduction

Thank you for the invitation to speak to you today here in the hometown of James Coyne.

Mr. Coyne, who died in 2012, was the governor of the Bank of Canada from 1955 to 1961. As governor, he stressed that price stability should be the primary function of monetary policy.

That principle—price stability—is now the cornerstone of monetary policy frameworks around the world. In practice, it is achieved by maintaining inflation at a low, stable and predictable level.

Our mandate at the Bank of Canada’s is to “promote the economic and financial welfare of Canada.” And, like former Governor Coyne, we believe that inflation control is the main contribution monetary policy can make to achieving that goal.

Our current monetary policy framework consists of an explicit inflation target and a flexible exchange rate. It was established in an agreement with the federal government in 1991 and, since 2001, has been renewed every five years.

With this framework, we have anchored inflation expectations, achieved low and stable inflation, and promoted sustained employment and economic growth.

Three main factors have contributed to the framework’s credibility and success.

First, we have a clear, simple and well-understood inflation target, whose focal point is 2 per cent. Second, the framework has political legitimacy, is coherent with other public policies and is implemented with effective tools. And third, we have a formal review process for continually improving the framework that is widely admired by many of our peers and was cited as one of the factors that earned us the Central Bank of the Year Award we received recently.

My speech today is the first in a series that my colleagues and I will be delivering over the next four years as we embark on our review of the framework leading up to the 2021 renewal of the inflation target.

I’ll start with some background on our experience—and that of many other central banks—with inflation in the 1970s and 1980s and on the lessons we learned trying to control it. I’ll discuss how and why the Bank adopted an inflation target for its monetary policy. I’ll review the impact of the policy on inflation, why it works so well, and the unique and innovative process we follow to ensure that it remains effective. Finally, I’ll conclude with a discussion of important economic developments affecting economies worldwide. Strengthening the framework to manage the potential risks these developments pose to the Canadian economy is the key objective of our research over the next four years.

The search for an anchor

Monetary policy needs a nominal anchor or a fixed point of reference to help tie down the expectations people have about inflation. During the 1960s, that anchor in most countries was a pegged nominal exchange rate that linked the value of domestic currencies to the US dollar.1 This exchange rate arrangement, known as the Bretton Woods system, collapsed in the early 1970s, largely because of unsustainable inflationary pressure in the United States. Without an anchor for monetary policy, inflation and inflation expectations rose rapidly, exacerbated by large oil price shocks. In some years, inflation hit double-digit levels in Canada and in other advanced economies.

Economist Milton Friedman’s great insight into inflation is that it is always and everywhere a monetary phenomenon, which led him to claim that low inflation could be achieved by controlling the growth rate of money. He also emphasized that inflation expectations are influenced by monetary policy and that they eventually adjust to actual inflation. For this reason, he argued, there is no long-run trade-off between inflation and output.2 Thus, central banks should focus on controlling inflation.

In 1975, the Bank adopted a money supply target. But, by 1982, we were forced to abandon it—or, rather, it abandoned us, as former Governor Gerald Bouey once quipped—after it became clear that financial innovations had weakened the Bank’s ability to control the money supply and overall spending with its policy interest rate.3 Unfortunately, by then inflation and inflation expectations had risen and the expectations had become so entrenched that inflation declined only when the Bank of Canada and most other major central banks boldly increased interest rates in the early 1980s. It worked, but at the cost of a severe global recession.

After this disinflation, the Bank renewed its search for a viable nominal anchor and considered various options.4 We tried to identify one that would be effective, straightforward to operationalize and easy to communicate, and that the public would trust.

In the late 1980s, then-Governor John Crow delivered several speeches in which he laid out an argument in favour of price stability itself as a long-run goal for monetary policy.5 The inflation rate was then running at roughly 5 per cent. No one knew with certainty what rate best represented price stability. And economic theory was not yet developed enough to confidently predict the outcome of such a policy, if implemented.

Still, the idea of using the policy rate to directly target the rate of inflation held promise. At the time, only one other country in the world had attempted such a policy approach: New Zealand adopted inflation targeting in 1990. Canada became the second the following year when the Bank and the Department of Finance announced an agreement on a monetary policy framework that set a path for reducing inflation.6 The agreement gave the Bank operational independence to use its statutory tools to achieve the inflation target, while at the same time acknowledging that “a range of public policies, besides monetary policy, can make a significant contribution” to controlling inflation.7

Since 1995, our inflation-control target has been 2 per cent, the midpoint of a 1 to 3 per cent range. Central banks in many other countries—37 in total—have now also adopted an inflation target and most, especially in advanced economies, have chosen 2 per cent as their target. Experience suggests that 2 per cent is sufficiently low that it does not materially distort economic decision making and behaviour, but still leaves the central bank adequate room to lower its policy rate in response to a significant adverse shock to the economy. Because a 2 per cent target balances these offsetting considerations, it is symmetric. In other words, we care equally about deviations above and below 2 per cent. The 1 to 3 per cent range reflects normal variations in consumer price index (CPI) inflation, since it is subject to a wide variety of temporary shocks. These ongoing shocks make it impossible to hit the 2 per cent target consistently.

We aim to achieve the target by adjusting our policy rate, which directly influences interest rates for household and corporate borrowing. Doing so helps align demand for domestically produced goods and services with the economy’s capacity to supply them. If aggregate demand is expected to exceed or fall short of the economy’s potential output, we typically raise or lower the policy interest rate to close the gap and keep inflation on target.

As I mentioned earlier, the other central pillar of our monetary policy framework is a flexible, market-determined exchange rate. It serves two important functions: it allows Canada to have an independent inflation target; and it helps the economy adjust to external shocks, most notably, movements in commodity prices.

The outcome

It’s not often that a policy performs better than expected. Our inflation-control target did just that, and continues to do so.

Over the past 27 years, we have reduced inflation as measured by the CPI and maintained it at a level close to our 2 per cent target, with no persistent episodes outside our control range (Chart 1).8 Because inflation has been so close to the 2 per cent target, it has served as an anchoring and coordinating mechanism, allowing Canadians to make better economic decisions and achieve better economic outcomes. In addition, there has been much less volatility in interest rates and output growth.

We have learned some key lessons from this experience.

First, the clarity and simplicity of the 2 per cent target has facilitated its communication and broad acceptance, and that has helped enhance the target’s credibility.

Second, as inflation expectations have become firmly anchored at the 2 per cent target, the effectiveness of the policy has increased (Chart 2). For example, during the global financial crisis of 2007–08, the Bank was able to aggressively reduce its policy rate and provide substantial monetary stimulus because inflation expectations were so well anchored. As a consequence, a reduction in the policy rate translated directly into a similar reduction in the real interest rate, which is necessary for stimulating demand.9

Third, the more successful we are at hitting the target, the more credible the policy is and the more confident Canadians are that inflation will remain on target (Figure 1).10 This self-reinforcing feedback loop has been instrumental in our ability to keep inflation on target.

We also recognize that the credibility and success of our inflation-targeting regime depends critically on the coherence of the macroeconomic and financial policy framework in Canada. For monetary policy to be effective, it must be complemented by sustainable fiscal policy, as well as strong financial regulation and supervision that promote financial stability.

Because inflation targeting has worked so well, it is easy to lose perspective. We now discuss inflation in decimal points rather than the percentage points we were worried about in the 1980s, when inflation was running, in some years, above 10 per cent. At the same time, we must also understand that when inflation is persistently away from the target, as it has been in recent years, we run the risk that inflation expectations will drift away from 2 per cent.

Reviews and renewals

While inflation targeting itself was very innovative, even more so is the joint agreement and its renewal process. For each renewal, the Bank conducts a deliberate, rigorous and transparent research program to critically examine important issues related to the policy framework. Based on this analysis, we adjust and improve the framework.

We examine two types of issues in the renewal process: fundamental and operational. Fundamental issues include whether the target for monetary policy should be changed, and to what extent monetary policy should consider financial stability concerns.11 Operational issues include how to measure underlying or core inflation.

Given the policy’s effectiveness, the renewals have gone smoothly. But, I can assure you, they are not automatic. The issues we research are based on monetary policy experience, primarily in Canada, but also in other jurisdictions, and on academic and policy-related discussions and research. We also consult widely, most notably with the Department of Finance, as well as other central banks, policy institutions and the private sector. All our research, as well as a comprehensive background document, is published on our website.

The renewal process has evolved over time as our experience and understanding of inflation targeting has broadened and deepened. Although we haven’t made many changes to the framework, we’ve gotten better at operationalizing it. Most notably, having a well-understood and credible inflation target has facilitated—and indeed demanded—more transparent communications, since the public can more easily hold the Bank accountable for monetary policy outcomes.12 To this end, we decided in November 2000 to announce adjustments to our policy rate on eight fixed dates throughout the year.13 Four of these announcements are accompanied by our Monetary Policy Report, which sets out our outlook for the global and Canadian economies as well as the risks to our projections. Starting this year, the four other decisions will be followed by a public speech by a member of Governing Council.

Finally, let me give you a quick overview of some of the questions we addressed in previous reviews.14

In 2011, we asked whether the 2 per cent target should be lowered, and in 2016, whether it should be raised. Decisions to alter the target rate of inflation require that we balance two considerations. On one hand, higher inflation is economically costly. It distorts the price mechanism and is socially unjust because many people, especially those with lower or fixed incomes, cannot adequately hedge their financial situation against higher inflation. On the other hand, higher inflation, if it were credible (which is a big “if”), would give the central bank a higher neutral policy rate. That’s the interest rate consistent with the economy growing at its potential and inflation staying on target. It serves as a benchmark for us to gauge the degree of monetary stimulus in place and provides a medium- to long-run anchor for the policy rate.

The level of the neutral rate is important because, in the event of an adverse shock, we would prefer to have sufficient room to lower our policy rate to provide stimulus without the risk of dropping it to zero or below. In some jurisdictions, policy rates have been lowered to slightly negative levels, but these negative levels appear to be less effective in stimulating economic activity. For both our 2011 and 2016 reviews, our research found that the 2 per cent target roughly balances these two considerations, especially since our target is clearly understood and is very credible.

In both reviews we also examined to what extent the conduct of monetary policy should take account of financial stability concerns. We concluded in both reviews that monetary policy should be used only in exceptional circumstances because it is most effective at achieving the inflation target, while macroprudential policy has proven useful for mitigating financial vulnerabilities.15 In addition, we found that post-crisis reforms have made the financial system much more resilient. We know financial stability is necessary for achieving the inflation target on a sustainable basis. Therefore, central banks must be mindful of the impact interest rate changes might have on financial stability and consider adopting a more flexible horizon over which to return inflation to target. Moreover, well-anchored inflation expectations provide more scope for central banks to implement a flexible horizon.

Finally, in 2016, we re-examined how we should measure core inflation. Our search led us to adopt three new measures. None of them is perfect but, together, they are giving us a much better reading of underlying inflation than previous measures did.16

Toward 2021

As I mentioned, our next renewal is in 2021. At this early stage in the process, we are examining recent economic developments that could affect the resilience of the Canadian economy. We are also assessing possible measures to strengthen the monetary policy framework to respond to adverse shocks and increase overall macro resilience. Three important developments in advanced economies could pose a challenge to our framework.

First are higher levels of household and public debt (Chart 3, Chart 4). Low interest rates have encouraged households to take on debt, and the elevated level of government debt is largely a legacy of stimulus policies pursued during the Great Recession of 2008–09. Now, there is less space, on average, across the G7 for more borrowing to stimulate demand.

Second, over the past 25 years, we’ve seen a gradual decline in interest rates, including long-term bond yields and, most importantly, estimates of the neutral interest rate (Chart 5).17 This reduces the scope of central banks to adjust their policy rate.

And, third, the trend rate of economic growth has been decreasing, owing to fundamental forces: lower labour force growth, reflecting an aging population, and declining labour productivity growth, which is more difficult to explain. The underlying growth in the economy is expected to remain low or to slow further. Therefore, the cyclical forces that normally help to propel an economy out of an unexpected downturn, namely business and residential investment as well as purchases of large durable goods, may be less powerful, especially if debt levels are high and confidence is slow to rebound. In such circumstances, policy might have to be more aggressive to boost confidence and increase demand.

The policy implications of these developments were the focus of our discussions in September 2017 at a public workshop we hosted at the Bank to launch our 2021 research agenda. We invited Canadian and international academics, journalists, and economists from the private sector, think-tanks and unions to suggest ideas for our research agenda for the renewal.18

These ideas can be grouped into three broad sets of issues regarding our monetary policy framework: its objective, the available tools to achieve the objective and the potential role of policy coordination. Let me say a few words about each.

On our objective, one alternative that participants discussed was a switch to price-level targeting (PLT). Under PLT, monetary policy would seek over time to keep the price level, rather than the inflation rate, on a predetermined path. This would imply that past deviations from this path would have to be reversed, likely gradually, with higher or lower rates of inflation. We researched PLT for the 2011 renewal and, in the end, we concluded that its benefits did not clearly outweigh the costs and risks of making the shift. But we also said that our assessment of PLT could change.

What about our tools? In recent years, central banks have used various tools to ease monetary conditions and stimulate demand when their policy rate was at the effective lower bound.19 For example, in 2009 we issued a conditional commitment to keep the key policy rate unchanged for a year, as long as the outlook for inflation didn’t change. Other central banks also used such explicit forward guidance as well as large-scale asset purchases, typically of government securities, for this purpose. Further research is needed to examine the effectiveness of these tools and how best to use them.

Finally, the experience during the crisis, when both aggressive monetary and fiscal stimulus were used, highlighted the benefits of simultaneous policy action.  Although monetary policy is normally seen as the most effective countercyclical policy tool because it can respond flexibly and nimbly to adverse shocks, it may need support from other policies more frequently in the future. Indeed, studies have shown that when rates are at the effective lower bound, countercyclical fiscal policies, such as automatic stabilizers, and discretionary policies, such as infrastructure spending, are highly effective. Our agreement with the federal government includes a commitment by both the Bank and the government to the inflation target. That means all economic policies—including monetary, fiscal and macroprudential—can work together in a complementary fashion for this purpose.20

More explicit coordination of fiscal and monetary policy would raise governance issues for both the government and the Bank, given our respective mandates. One interesting suggestion that came up at the workshop was to focus our research on mechanisms to coordinate policies, because complementary frameworks could deliver better outcomes.

Conclusion

Let me conclude.

Canada’s experience with inflation targeting has been much more successful than originally expected. In hindsight, we underestimated how powerful anchored inflation expectations would be in helping to keep inflation close to target.

Our policy framework continues to work, and work well—inflation and inflationary expectations remain firmly anchored. The framework’s strengths are the following:

• It features a clear, simple and well-understood target—a focal point.
• The agreement with the government underpins its credibility.
• And, finally, it is continually improved through the renewal process to ensure that we are able to meet future challenges.

A strong framework enhances the resilience of the economy, making it better able to weather adverse shocks. An important recent example of such a shock was the sizable oil and commodity price declines in 2014 and 2015. The policy rate reductions we made in 2015 in response to this shock were effective in facilitating the economy’s adjustment and returning inflation to target.

In coming speeches in this series on the review of our framework, we will finalize and share with you the research questions we will be working on leading up to the 2021 renewal.

We continue to believe that the best contribution the Bank can make to improving the performance of the Canadian economy is to ensure that inflation remains low, stable and predictable.

I would like to thank Robert Amano and Thomas Carter for their help in preparing this speech.

NOTES

1. In turn, the US dollar was convertible to gold at a rate of US$35 an ounce. [←]
2. Friedman’s analysis of inflation expectations and a vertical long-run Phillips curve can be found in M. Friedman, “The Role of Monetary Policy,” Presidential Address delivered at the American Economic Association, 1967, and published in The American Economic Review 58, no. 1 (March 1968): 1–17. [←]
3. The measure of the money supply targeted was M1, which includes its most liquid components: coins, cash and chequing accounts. The innovations that made it difficult to target were in both non-personal and personal banking. The years leading up to and following its abandonment in 1982 witnessed an exhaustive search for alternative, broader aggregates of the money supply that could be targeted instead, although a suitable replacement was not ultimately found. For an account of this search, see F. Caramazza, D. Hostland and S. Poloz, “The Demand for Money and the Monetary Policy Process in Canada,” Journal of Policy Modeling 12, no. 2 (Summer 1990): 387–426. [←]
4. These options included different monetary aggregates, along with nominal spending, the exchange rate and the price level. See P. Duguay and D. Longworth, “Macroeconomic Models and Policy Making at the Bank of Canada,” Economic Modelling 15, no. 3 (July 1, 1998): 357–75. [←]
5. J. Crow, “The Work of Canadian Monetary Policy,” The Eric John Hanson Memorial Lecture Series II (Winter 1988), Department of Economics, University of Alberta, Edmonton, January 18, 1988. [←]
6. The agreement established a path for a progressive reduction in the rate of inflation to 3 per cent by the end of 1992, 2 1/2 per cent by the middle of 1994 and 2 per cent by the end of 1995. The agreement provided no specific target for the post-1995 period, although it was understood that the experience of the first four years would inform the selection of the target. The target has remained at 2 per cent since then and is tracked by Statistics Canada’s measure of total CPI inflation. [←]
7. The Bank of Canada Act gives the Minister of Finance the ability to issue a binding directive to the Governor if the two encounter irreconcilable differences concerning monetary policy. This power has never been exercised. Its use would entail significant political costs: the directive must be made public and would likely trigger the Governor’s resignation. [←]
8. See Table 1, Renewal of the Inflation-Control Target—Background Information—October 2016. [←]
9. This was not always the case. In the early 1990s, when expectations were less well anchored, the Bank found it difficult to reduce the policy rate because the exchange rate would depreciate sharply. [←]
10. For recent evidence on the impact of the inflation target on inflation expectations in Canada, see P. Beaudry and F. Ruge-Murcia, “Canadian Inflation Targeting,” Canadian Journal of Economics 50, no. 5 (December 2017): 1556–1572; and J. Yetman, “The Evolution of Inflation Expectations in Canada and the US,” Canadian Journal of Economics 50, no. 3 (August 2017): 711–37. [←]
11. Fundamental issues that represent changes in the primary objective of monetary policy would be included in the joint agreement. [←]
12. Beaudry and Ruge-Murcia (2017) argue that the adoption of the inflation target enhanced the governance of monetary policy in Canada. [←]
13. Previously, interest rate decisions were announced on a more ad hoc basis, often after interest rate adjustments by the US Federal Reserve. [←]
14. See Renewal of the Inflation-Control Target—Background Information—October 2016 and Renewal of the Inflation-Control Target—Background Information—November 2011. [←]
15. See T. Lane, “Monetary Policy and Financial Stability—Looking for the Right Tools” (speech at the HEC Montréal, Quebec, February 8, 2016). [←]
16. L. Schembri, “Getting to the Core of Inflation” (speech at the Department of Economics, Western University, London, Ontario, February 9, 2017). [←]
17. The Bank’s current estimate of the neutral rate of interest, which appeared in the January Monetary Policy Report, is 2.5 to 3.5 per cent in nominal terms, down from a range of 3.0 to 4.0 per cent a little more than three years ago. [←]
18. The proceedings of the workshop, as well as speeches and other material related to the 2021 renewal and previous renewals, are available at Toward 2021-Reviewing the monetary policy framework. [←]
19. S. S. Poloz, “Prudent Preparation: The Evolution of Unconventional Monetary Policies” (speech to the Empire Club of Canada, Toronto, Ontario, December 8, 2015). [←]
20. Governor Stephen S. Poloz has described the agreement as a “simple yet elegant” form of monetary and fiscal policy coordination. See: S. S. Poloz, “The Doug Purvis Memorial Lecture—Monetary/Fiscal Policy Mix and Financial Stability: The Medium Term Is Still the Message,” Staff Discussion Paper, No. 2016-13, Bank of Canada, June 2016. [←]

FULL DOCUMENT: https://www.bankofcanada.ca/wp-content/uploads/2018/02/remarks-150218.pdf

The Globe and Mail. 16 Feb 2018. Bank of Canada eyes working more closely with Ottawa – but not too close
BARRIE McKENNA, OTTAWA

No one would want politicians deciding where interest rates should be set because there could be conflicts between political and economic goals.

CRAIG ALEXANDER CONFERENCE BOARD OF CANADA CHIEF ECONOMIST

The Bank of Canada is exploring the idea of working more closely with Ottawa to co-ordinate interest-rate relief and government spending during economic slumps – a path some economists say could endanger the bank’s independence.

Emerging risks – including slow growth and historically low interest rates in the financial market – could make monetary policy less effective when the next shock hits, deputy governor Lawrence Schembri warned in a speech on Thursday to the Manitoba Association for Business Economists.

Among the options to strengthen the bank’s monetary policy framework is “more explicit” coordination of policy moves with government spending programs, he said.

“The experience during the [2008-09 financial] crisis, when both aggressive monetary and fiscal stimulus were used, highlighted the benefits of simultaneous policy action,” Mr. Schembri pointed out.

The proposal comes as the central bank lays the groundwork for the next scheduled five-year renewal of its 2-per-cent inflation target in 2021.

Higher levels of household and government debt, a long-term decline in interest rates in the broader economy and slow growth are all making the job of central banks more difficult, Mr. Schembri said. Real – or after-inflation – interest rates have slumped to near zero from more than 6 per cent in the early 1990s, limiting the influence of monetary policy. “Countercyclical fiscal policies, such as automatic stabilizers, and discretionary policies, such as infrastructure spending, are highly effective,” Mr. Schembri said. (Government stabilizers are programs such as employment insurance that automatically prop up the economy when slumps lead to higher joblessness.)

Mr. Schembri acknowledged that the prospect of the independent central bank working more closely with the federal government raises “governance issues” for both Ottawa and the bank.

Conference Board of Canada chief economist Craig Alexander called the idea dangerous.

“The central bank cannot afford to lose its independence,” Mr. Alexander warned. “No one would want politicians deciding where interest rates should be set because there could be conflicts between political and economic goals.” A more workable alternative would be an arrangement that automatically boosts jobless benefits when the economy stalls, he said.

CIBC chief economist Avery Shenfeld expressed qualified support for the proposal.

“It’s an interesting idea, and a sound one given the concern that in the next recession, we might run out of room to cut interest rates,” Mr. Shenfeld said. However, he cautioned that future governments could easily counteract their predecessors’ co-ordinated action, either by writing legislation to undo it or through offsetting spending moves.

The Bank of Canada has stuck with the 2-per-cent inflation target since 1995 as the centrepiece of its monetary policy framework. The bank reduces its benchmark rate when growth is weak and inflation appears to be falling below the target. On the other hand, when the economy is growing at a healthy clip and inflation is starting to perk up, the bank can raise rates to cool things down.

Among other options is an adjustment in the 2-per-cent target, signalling to markets exactly where its benchmark rate is headed, large-scale purchases of government bonds and other assets such as price-level targeting, Mr. Schembri said.

Mr. Schembri’s remarks did not touch on the timing of the next rate move by the Bank of Canada, which has raised its key rate three times since last June, to 1.25 per cent. The bank’s next rate-setting announcement is scheduled for March 7.

INVESTMENT

StatCan. 2018-02-16. Investment income, 2016
   
Both the number of Canadian tax filers reporting investment income and the actual amount of investment income declined in 2016. Investment income refers to the sum of dividend income from taxable Canadian corporations and interest income from investments in non-tax-sheltered vehicles.

Nationally, just over 7.3 million tax filers reported income from investments in 2016, down 2.2% from 2015.

Investment income also decreased at the national level in 2016, down 16.8% to $68.9 billion (in constant dollars). This was in marked contrast to the 18.2% increase in 2015, but brought the amount more in line with 2014 levels. Over the two year period from 2014 to 2016, the decrease was 1.3% (in constant dollars).

Decreases in investment income occurred in every province and territory except Yukon (+4.5%) and New Brunswick (+4.1%). Alberta (-40.0%) and Northwest Territories (-37.2%) reported the largest declines in 2016. Notably, Alberta (+34.0%) and the Northwest Territories (+40.5%) had the largest increases in 2015. As with the national picture, the large declines in Alberta and Northwest Territories bring the level of investment income received in these regions in 2016 closer to the levels seen in 2014.

Median investment income also decreased nationally, from $670 in 2015 to $650 in 2016 (in constant dollars). In other words, half of the tax filers reporting investment income in 2016 reported more than $650, while the other half reported less than $650.

Tax filers in British Columbia reported the highest median investment income ($820), followed by those in Alberta ($810) and Yukon ($740). Tax filers in Nunavut reported the lowest median investment income ($160), followed by Newfoundland and Labrador and the Northwest Territories (both at $330).

Among census metropolitan areas (CMAs), tax filers in Victoria and Kelowna reported the highest median investment income ($1,080), followed by Calgary ($970). The lowest median investment income was reported in Saguenay ($380) and St. John's ($390).

Victoria was also the CMA with the highest proportion of tax filers reporting investment income (36.1%), followed by Kelowna (34.7%) and Vancouver (34.6%).

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/180216/dq180216c-eng.pdf

REUTERS. FEBRUARY 16, 2018. Foreign investment in Canada securities dips after long run

OTTAWA (Reuters) - Foreign investment in Canadian securities slipped slightly in December after five strong months but international demand over the year was high enough to set an annual record, Statistics Canada said on Friday.

Non-resident investors sold a net C$1.97 billion ($1.58 billion) in Canadian securities after acquiring C$19.20 billion in November. For 2017 as a whole, foreigners bought C$188.52 billion in Canadian securities, up from the previous high of C$171.77 billion in 2016.

International investors sold C$4.03 billion worth of Canadian bonds, mostly provincial bonds. They bought C$1.66 billion in stocks and $401 million in money market paper.

Canadians bought a record $21.99 billion in international securities in December, virtually all in stocks. For 2017 as a whole they bought C$84.66 billion in foreign securities, a new all-time high.

($1=$1.25 Canadian)

Reporting by David Ljunggren; Editing by Jeffrey Benkoe

AVIATION

REUTERS. FEBRUARY 16, 2018. Boeing's 737 MAX-9 aircraft receives FAA approval

(Reuters) - The world’s largest plane maker Boeing Co (BA.N) said on Friday the U.S. Federal Aviation Administration had officially certified its 737 MAX-9 aircraft for commercial service.

The stamp of approval affirms the airplane’s handling, systems and overall performance all comply with required aviation regulations, Boeing said.

Boeing Co
357.99
BA.NNEW YORK STOCK EXCHANGE
+1.53(+0.43%)
BA.N

BA.N

Keith Leverkuhn, 737 general manager, said on Wednesday he expected the certification “within a matter of days-weeks.”

Boeing said it was in the final stages of preparing the aircraft, which is designed for 220 passengers, for its first delivery to Lion Air Group.

Reporting by Arunima Banerjee in Bengaluru

CANADA - HAITI

Global Affairs Canada. February 16, 2018. Minister Bibeau to travel to Haiti

Ottawa, Ontario - Canada and Haiti enjoy a special relationship. Canada has long had close links with Haiti and stands in solidarity with the Haitian people.

It is in this context that the Honourable Marie-Claude Bibeau, Minister of International Development and La Francophonie, will visit Haiti for a third time, from February 18 to 21, 2018.

During her visit, Minister Bibeau will meet with Haiti President Jovenel Moïse, Prime Minister Jack Guy Lafontant and other government representatives to review Canada’s cooperation program, discuss shared priorities for Haiti's development and consider ways the two countries can strengthen cooperation and accountability mechanisms. The Minister will underscore Canada’s support for Haiti’s health sector and emphasize to the Haitian government the sector’s importance in the country’s development.

The Minister will also visit development projects supported by Canada and meet with key stakeholders who support the empowerment of women and girls and who work in the areas of health and agricultural development.

Quotes

“Canada’s goal in supporting the empowerment of women and girls in Haiti is to make the country’s whole population stronger, more resilient and more self-reliant. I am pleased to travel to Port-au-Prince to continue our discussions with various government and civil society partners, with a view to building on our shared achievements.”

- Marie-Claude Bibeau, Minister of International Development and La Francophonie.

Quick Facts

• The Haiti program is one of Canada’s largest development programs. Canada is Haiti’s second-largest bilateral donor, after the United States.
• Canada’s current priorities in Haiti are the promotion of human dignity, particularly with regard to health, the empowerment of women and girls, growth for all, the fight against climate change, inclusive governance, and peace and security.
• Canada is a lead donor to Haiti’s health sector. Canada’s support aims to improve the quality of and accessibility to the country’s health system, especially in the most underserved areas.

Embassy of Canada to Haiti: http://www.canadainternational.gc.ca/haiti/index.aspx?lang=eng
Canadian international assistance in Haiti: http://international.gc.ca/world-monde/issues_development-enjeux_developpement/priorities-priorites/where-ou/haiti.aspx?lang=eng
Canada - Haiti Relations: http://www.canadainternational.gc.ca/haiti/bilateral_relations_bilaterales/canada_haiti.aspx?lang=eng

________________

LGCJ.: