CANADA ECONOMICS

MERCOSUR - CANADA

Global Affairs Canada. March 9, 2018. Minister Champagne welcomes agreement to launch trade negotiations with Mercosur

Ottawa, Ontario - Canada is committed to securing new progressive trade agreements in fast-growing markets, such as the Mercosur trade bloc—Argentina, Brazil, Paraguay and Uruguay—to deliver more benefits for hard-working Canadians. Trade diversification will continue to drive economic growth, help businesses succeed abroad and create new middle-class jobs from coast to coast to coast.

Today, in Asunción, Paraguay, the Honourable François-Philippe Champagne, Minister of International Trade, welcomed the agreement to launch negotiations toward a comprehensive Canada-Mercosur free trade agreement (FTA).

Building on the announcement of exploratory talks in February 2018, Minister Champagne, along with Mercosur trade bloc ministers Jorge Marcelo Faurie, Argentina’s Minister of Foreign Affairs and Worship; Aloysio Nunes Ferreira, Brazil’s Minister of Foreign Affairs; Marcos Jorge de Lima, Brazil’s Minister of Industry, Foreign Trade and Services; Eladio Loizaga, Paraguay’s Minister of Foreign Affairs; and Rodolfo Nin Novoa, Uruguay’s Minister of Foreign Affairs, agreed to launch formal negotiations. The objective of a new FTA is to increase economic opportunities for the benefit of all member countries.

A comprehensive, ambitious and progressive FTA with Mercosur would provide improved market access for world-class Canadian goods and create more opportunities for established and first-time exporters to tap a rapidly growing market. Canadian exporters in sectors such as energy, the extractive industries, infrastructure, environment, telecommunications, distribution and logistics, transportation and tourism could benefit from preferential access to a fast-growing market of over 260 million consumers. A successful FTA also has the potential to provide Canadian consumers and businesses with enhanced access to imports of goods and services from Mercosur countries.

The Government of Canada is committed to advancing a progressive trade agenda, in recognition that trade policies need to respond and contribute meaningfully to overall economic, social and environmental policy priorities. In addition to an environmental assessment, Canada is for the first time committing to expanding, in the context of Mercosur negotiations, the impact assessment process to include, for example, labour and gender.

The government is committed to ensuring that a Canada-Mercosur trade agreement will include provisions aimed at sharing the benefits of trade among all, including women, youth, Indigenous people, small and medium-sized enterprises and the middle class.

As part of its commitment to transparency, the government has spent the past year listening to a broad range of Canadians, including representatives of industry and business organizations, Indigenous groups, labour unions, civil society groups, environmental groups and Crown corporations, as they share their views on strengthening trade relations with Mercosur countries.

The first round of FTA negotiations will take place in Ottawa from March 20 to 23, 2018.

Quotes

“With a combined population of 260 million and a GDP of over $3 trillion, the Mercosur member countries of Argentina, Brazil, Paraguay and Uruguay offer Canada an opportunity to deliver on its ambitious and diversified trade agenda with like-minded and fast-growing markets.”

- François-Philippe Champagne, Minister of International Trade

Quick facts

• In 2017, Canada and Mercosur exchanged $8.9 billion in trade.
• With a combined population of 260 million and a GDP of over $3 trillion, Mercosur is the world’s fourth-largest trading bloc.
• The South American trade bloc of Mercosur is a customs union established by Argentina, Brazil, Paraguay and Uruguay in 1991.

Global Affairs Canada. March 9, 2018. Joint statement on the launch of negotiations toward a comprehensive free trade agreement between Canada and the Mercosur member states

Asunción, Paraguay - Ministers of the Mercosur member states, Jorge Marcelo Faurie, Argentina’s Minister of Foreign Affairs and Worship; Aloysio Nunes Ferreira, Brazil’s Minister of Foreign Affairs; Marcos Jorge de Lima, Brazil’s Minister of Industry, Foreign Trade and Services; Eladio Loizaga, Paraguay’s Minister of Foreign Affairs; and Rodolfo Nin Novoa, Uruguay’s Minister of Foreign Affairs, met with the Honourable François-Philippe Champagne  Canada’s Minister of International Trade, on March 9, 2018, in Asunción.

At the conclusion of their meeting, the ministers agreed as follows:

Joint statement on the launch of negotiations toward a comprehensive free trade agreement between the Mercosur member states and Canada

The ministers agreed to launch negotiations toward a comprehensive Canada-Mercosur free trade agreement (FTA). This represents a significant step toward deepening the important relationship between the Mercosur member states and Canada.

The ministers underscored the opportunity a comprehensive, progressive and commercially meaningful FTA presents for the mutual benefit of Canada and Mercosur. Strengthening ties through enhanced trade and investment flows is an integral step toward a shared interest in sustainable prosperity and a shared commitment to trade liberalization and open markets.

The ministers recognized the importance of advancing this initiative in an inclusive manner. Mercosur and Canada will seek to negotiate issues such as market access for goods and services, labour, the environment, trade and gender, micro-, small and medium-sized enterprises, among others. Integrating these elements will reinforce a collective commitment to lasting economic growth and development for all people.

The ministers committed to pursue negotiations of an FTA in order to bring opportunities to the people of Canada and Mercosur without delay and have instructed officials to hold the first round of negotiations in Ottawa, Canada, from March 20 to 23, 2018.

Global Affairs Canada. 2018-03-08. Mercosur trade bloc - Benefits for Canada

Expanding Canada’s trade with large fast-growing markets, such as Mercosur, is a priority for the Government of Canada and contributes to its trade diversification strategy. The government’s objectives are to increase the country’s prosperity through creating more opportunities for more Canadians to pursue new markets, compete and win. The strategy also provides Canadians with a greater choice of affordable products, raises living standards in the process and creates well-paying jobs for the middle class.

With a combined population of 260 million and GDP of over $3 trillion, Mercosur—the South American trading bloc composed of Argentina, Brazil, Paraguay and Uruguay—offers Canada an opportunity to deliver on its ambitious trade agenda with large and like-minded fast-growing markets. Opportunities abound to increase our current $8.9 billion in bilateral trade, which will help to create more jobs in Canada. This includes opportunities for micro, small and medium-sized enterprises (MSMEs), which will benefit by having increased access to markets to sell their world-class products.

Trade diversification

As a key part of Canada's trade diversification agenda, a free trade agreement with Mercosur would mean that 85% of Canada's trade is now covered by trade agreements with countries that account for 66% of all global economic activity.

In combination with Canada’s existing free trade agreements, an agreement between Canada and Mercosur would enable 98% of Canada's current trade with South America to benefit from preferential access, making Canada the hemisphere's most open and privileged trading partner.

Opportunities by sector

As the world’s fourth-largest trading bloc, Mercosur presents significant commercial opportunities for Canadian companies and workers in sectors across the country—from British Columbia’s lumber and Ontario’s auto parts and chemicals products to Quebec’s aerospace sector and the Atlantic provinces’ fisheries. This important market is ripe for Canadian products and for the specialized know-how of the workers who produce them.

A comprehensive and ambitious outcome in a free trade agreement with Mercosur would enhance market access for Canadian world-class goods, creating more opportunities for established and first-time exporters to tap a rapidly growing market and generating new jobs at home.

For example, market access, in the form of reduced tariffs, could be enhanced for Canadian exporters in a number of industrial sectors, including:

• automobiles and parts (current tariffs up to 35%)
• chemicals and plastics (current tariffs up to 18%)
• pharmaceuticals (current tariffs up to 14%)
• aluminum (current tariffs up to 16%)
• machinery and equipment (current tariffs up to 20%)
• information and telecommunications technology (current tariffs up to 20%)
• scientific instruments (current tariffs up to 18%)
• forestry sector (current tariffs up to 16%).

Opportunities also exist for services suppliers in sectors where Canadians excel, such as in infrastructure, distribution and logistics; transportation; tourism and travel-related services; as well as services linked to the extractive industries.

Benefits for consumers

A comprehensive and ambitious outcome in a free trade agreement with Mercosur also has the potential to reduce high tariffs on many of Mercosur’s exports to Canada. This will benefit Canadian customers looking for more choices at more affordable prices. Some of these include key benefits for every Canadian workers and their families in areas where high tariffs are currently applied, such as in the apparel, footwear and furniture sectors.

Canada’s progressive trade agenda

A Canada-Mercosur free trade agreement would be a strategic opportunity for Canada to advance its progressive trade agenda in an important and growing region. Mercosur member countries are willing partners in the pursuit of tangible progressive trade elements, such as in the areas of gender, MSMEs, environment and labour, as part of these negotiations.

As part of the its commitment to transparency and openness, the government has spent the past year listening to a broad range of Canadians, including representatives of industry and business organizations, Indigenous groups, labour unions, civil society groups, environmental groups and Crown corporations, as they share their views on strengthening trade relations with Mercosur. While the consultation period in the Canada Gazette is over, officials continue to accept views and submissions from Canadians on this initiative and discussions continue coast to coast to coast on opening more doors for Canadians.

FULL DOCUMENTS (Canada-Mercosur joint statement; Conclusion of Canada-Mercosur exploratory talks; Canada and Mercosur; Mercosur trade bloc: Benefits for Canada): https://www.canada.ca/en/global-affairs/news/2018/03/minister-champagne-welcomes-agreement-to-launch-trade-negotiations-with-mercosur.html

The Globe and Mail. THE CANADIAN PRESS. 9 Mar 2018. Canada to pursue trade deal with South American bloc. Ottawa expected to start formal negotiations with Mercosur, which includes Brazil, Argentina, Uruguay and Paraguay
MIKE BLANCHFIELD

Canada is expected to announce on Friday the start of formal freetrade negotiations with the fourcountry South American trade bloc known as Mercosur.

A spokesman for International Trade Minister François-Philippe Champagne said the negotiations could begin in earnest in the next 10 days.

That announcement will come after Mr. Champagne formally signs the reconstituted and much larger Trans-Pacific Partnership agreement in Santiago.

Joseph Pickerill, Mr. Champagne’s spokesman, says the progress on both deals is a positive sign that Canada’s efforts have paid off to diversify its international trade portfolio in the face of growing uncertainty with its top trading partner, the United States.

This week’s inroads into the Pacific Rim and South America come as U.S. President Donald Trump threatens to levy stiff tariffs on steel and aluminum, and with persistent uncertainty plaguing renegotiations of the North American free-trade agreement.

Canada was able to win exemptions on digital content in the renegotiated TPP, but the government has faced heavy criticism from Canadian auto workers and manufacturers for signing side deals with Japan, Australia and Malaysia on automobiles.

The signing of the new 11-country TPP marks the culmination of a massive salvage operation that kicked into gear after Mr. Trump pulled the United States out of the deal immediately after being sworn into the Oval Office last January.

The new TPP – known as the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership – will give Canada access to a market of 1.7 billion people, comprising 13 per cent of the world’s gross domestic product.

Mercosur is much smaller – just 260 million consumers – but would deliver Canada a deal with Brazil, the biggest country in the Mercosur bloc, which also includes Argentina, Paraguay and Uruguay.

Mr. Pickerill said the Mercosur countries “are keen [on] Canada’s approach to trade and are prepared to do a more comprehensive deal than was ever on the table in the past.”

But striking a deal with Mercosur won’t be easy, said Carlo Dade, an expert on Latin American affairs with the Alberta-based Canada West Foundation. That’s because Brazil and Argentina have been reluctant to talk free trade with Canada in the past, and though they’ve opened the window, uncertainty remains, he said.

Potential irritants with Brazil include its likely demands for greater access for its beef into Canada, and the ongoing aerospace dispute between Canada’s Bombardier Inc. and Brazil’s Embraer SA, he added.

“This is going to be a tough negotiation. Brazil is a large market, so is Argentina,” Mr. Dade said. “With Argentina, it’s a small window. It’s a soap opera that changes every week. And this week we’ve got a government that wants to talk to us.”

Argentine President Mauricio Macri has imposed unpopular austerity measures in an attempt to stimulate a stalled economy and attract foreign investment.

He won power in 2015, unseating Cristina Fernandez, who – along with her ex-vice president – is embroiled in a corruption scandal after eight years in power.

US TARIFFS ON STEEL AND ALUMINIUM

THE WHITE HOUSE. GLOBAL AFFAIRS. 03/08/2018. US Proclamations on Adjusting Imports of Steel and Aluminium into the United States. Canadian reaction.

DOCUMENT: http://e-gonomics.blogspot.com/2018/03/us-economics-white-house.html?spref=tw

Atlantic Canada Opportunities Agency. March 9, 2018. Federal and Provincial Governments to Announce Funding for Max Steel 

Clair, NB – René Arseneault, Member of Parliament for Madawaska-Restigouche, on behalf of the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development and Minister responsible for the Atlantic Canada Opportunities Agency, along with the Honourable Francine Landry, MLA for Madawaska Les Lacs-Edmundston and Minister responsible for Opportunities New Brunswick, on March 12, 2018, 1:00 p.m., will announce support for Max Steel, enabling the company to expand its operations.

The Globe and Mail. 9 Mar 2018. Canada, Mexico exempt from U.S. steel, aluminum tariffs, President says
ADRIAN MORROW, WASHINGTON
GREG KEENAN
NIALL McGEE, TORONTO, With reports from Lawrence Martin in Washington and Reuters

U.S. President Donald Trump has exempted Canada and Mexico from his steel and aluminum tariffs pending the renegotiation of NAFTA, simultaneously offering his continental trading partners a welcome reprieve and tightening the vise on them at the bargaining table.

Mr. Trump unveiled details on Thursday of his tariffs of 25 per cent on steel and 10 per cent on aluminum, which will take effect in 15 days. For now, only Canada and Mexico will escape the levies; other countries will have to negotiate for exemptions.

The President is citing national security – the need to secure a domestic supply of metal for military equipment – as the reason for applying the duties under an obscure 1962 law.

“We’re going to hold off the tariff on those two countries to see whether or not we’re able to make a deal on NAFTA,” Mr. Trump said. “If we’re making a deal on NAFTA, this will figure into the deal and we won’t have the tariffs on Canada or on Mexico. … I have a feeling we’re going to make a deal on NAFTA.”

The proclamation of the tariffs said Canada and Mexico are expected to “take action” to stop other countries from using them as a back-door to get their steel into the United States. One Canadian source said Ottawa is serious about ensuring it does not become a conduit for countries trying to thwart the U.S. tariffs. It was not immediately clear if the United States expected its partners in the North American freetrade agreement to write tougher trade barriers of their own into the renegotiated pact.

The exemption follows a lobbying blitz by Canadian officials, who focused much of their effort on mobilizing pro-trade forces within the administration.

Canadian government sources said two channels of communication were particularly vital: Defence Minister Harjit Sajjan to Defence Secretary James Mattis, and Finance Minister Bill Morneau to Treasury Secretary Steve Mnuchin. Mr. Mattis, who hunkered down with Mr. Sajjan in Brussels on the sidelines of a North Atlantic Treaty Organization meeting in February, told Mr. Trump the tariffs should be narrowed as much as possible to spare U.S. allies.

Canada’s ambassador to Washington, David MacNaughton, made a final push in a White House meeting on Wednesday with U.S. national security adviser H.R. McMaster, and a subsequent dinner at the Willard Hotel, the sources said. Ontario Premier Kathleen Wynne pressed U.S. Ambassador Kelly Craft and Republican governors, including Michigan’s Rick Snyder, to take Canada’s case to the administration, one source said.

Ottawa argued its industries are so integrated with those of the United States that penalizing them would hurt U.S. businesses. The national security issue was particularly compelling to the White House, one source said: Canada is a close ally and supplier of metals to U.S. military production, so the tariffs would be counterproductive.

Canada is both the largest supplier and the largest export market of the United States for aluminum and steel.

The President’s move increases the pressure on Canada and Mexico to agree to a NAFTA deal with the United States, which is demanding greater advantages. The three sides wrapped up the seventh round of talks in Mexico earlier this week with little progress on the most contentious issues.

Canadian officials said they will keep working towards a NAFTA settlement, and still hope to lobby for a permanent exemption on steel and aluminum as a separate issue.

“Today is a step forward,” Foreign Affairs Minister Chrystia Freeland told reporters at a government office in Toronto. “There’s more hard work to do, and we will not let up. This work continues and it will continue until the prospect of these duties is fully and permanently lifted.”

Jerry Dias, leader of Canada’s largest private-sector union, called Mr. Trump’s exemption “trade blackmail.” The Unifor president insists Washington has no interest in reaching a reasonable deal on NAFTA.

Mr. Trump’s tariff action makes good on his long-standing pledge of trade barriers to foreign imports, but is certain to trigger a global trade war.

Chinese Foreign Minister Wang Yi warned on Thursday that he would make a “justified and necessary response” to the tariffs. “Especially given today’s globalization, choosing a trade war is a mistaken prescription. The outcome will only be harmful,” he told reporters in Beijing.

The European Union has released a list of U.S. goods it plans to target with retaliatory tariffs, including Kentucky bourbon, Levi’s jeans and HarleyDavidson motorcycles.

Mr. Trump is also facing a battle with some Republicans. Arizona Senator Jeff Flake said on Thursday he would present legislation to “nullify” the tariffs before they come into effect.

“These so-called ‘flexible tariffs’ are a marriage of two lethal poisons to economic growth – protectionism and uncertainty,” Mr. Flake said in a statement. “Trade wars are not won, they are only lost. Congress cannot be complicit as the administration courts economic disaster.”

Jean Simard, CEO of the Aluminum Association of Canada, a non-profit that represents aluminum producers, called the announcement “relatively positive” news for the industry.

“There is oxygen in the room,” he said. “It’s an opening to work together to find a way out of this for Canada.”

Still, he said uncertainty over the final outcome on tariffs will weigh on the domestic industry and put the brakes on major new investment: “When you are investing billions of dollars, you have to be able to see ahead very clearly.”

The Canadian Steel Producers Association (CSPA) said it welcomed the exemption, but cautioned that Canada needs to ensure that offshore steel now too expensive for the U.S. market is not diverted to Canada.

“We continue to support the dialogue between Canadian and U.S. governments to ensure our integrated markets remain open,” CSPA president Joseph Galimberti said in a statement.

Mr. Trump said any decisions on further exemptions would be tied to national security and “who’s paying the bills, who’s not paying the bills” – an apparent reference to his complaint that other NATO members are not picking up their share of the tab for defence.

Mr. Trump said he is also planning further trade actions against both China and India in the form of a “reciprocal tax” on imports.

REUTERS. MARCH 9, 2018. U.S. allies line up for exemptions from Trump's tariffs
Robin Emmott, Ruby Lian, Aaron Sheldrick

BRUSSELS/SHANGHAI/TOKYO (Reuters) - From Japan and South Korea to Australia and Europe, officials lined up on Friday to seek exemptions from President Donald Trump’s tariffs on U.S. steel and aluminum imports, while Chinese producers called on Beijing to retaliate in kind.

Tokyo and Brussels rejected any suggestion that their exports to the United States threatened its national security - Trump’s justification for imposing the tariffs despite warnings at home and abroad that they could provoke a global trade war.

“We are an ally, not a threat,” European Commission Vice President Jyrki Katainen said.

China’s metals industry issued the country’s most explicit threat yet in the row, urging the government to retaliate by targeting U.S. coal - a sector that is central to Trump’s political base and his election pledge to restore American industries and blue-collar jobs.

Trump signed an order for the 25 percent tariffs on steel imports and 10 percent for aluminum at the White House on Thursday to counter cheap imports, especially from China, which he described as “an assault on our country”.

(For an interactive graphic on U.S. steel products imports click tmsnrt.rs/2oPeo1z)

However, he said “real friends” of the United States could win waivers from the measures, which come into force after 15 days. In the event he exempted Canada and Mexico.

Brazil, which after Canada is the biggest steel supplier to the U.S. market, said it wanted to join the exemption list and Argentina made a similar case.

Japan, the United States’ top economic and military ally in Asia, was next in line. Chief Cabinet Secretary Yoshihide Suga told a news conference that Japan’s steel and aluminum shipments posed no threat to U.S. national security.

With Japan a major trade partner and international investor, Suga said that, on the contrary, they contributed greatly to employment and industry in the United States. Japan’s steel industry body also expressed concern.

The European Union, the world’s biggest trade bloc, chimed in. “Europe is certainly not a threat to American internal security so we expect to be excluded,” European trade Commissioner Cecilia Malmstrom said in Brussels.

Malmstrom told reporters the EU was ready to complain to the World Trade Organization, and retaliate within 90 days. She will meet U.S. Trade Representative Robert Lighthizer and Japanese Trade Minister Hiroshige Seko in Brussels on Saturday when she will ask whether the EU is to be included in the tariffs.

She won support from German Chancellor Angela Merkel. Shares in European steelmakers fell, although Germany’s two biggest producers Thyssenkrupp (TKAG.DE) and Salzgitter (SZGG.DE) have insisted the impact on them will be limited.

Other officials at the EU, by far the biggest trading partner of the United States by value, have warned it could take counter-measures including European tariffs on U.S. oranges, tobacco and bourbon.

Some products under consideration are largely produced in constituencies controlled by Trump’s Republican Party. Brussels has reminded Trump that tit-for-tat trade measures deepened the Great Depression in the 1930s and in the 2000s cost thousands of U.S. jobs when Washington imposed tariffs on European steel.

European industry associations called on Malmstrom to react to the tariffs. “The loss of exports to the U.S., combined with an expected massive import surge in the EU, could cost tens of thousands of jobs in the EU steel industry and related sectors,” said Axel Eggert, head of steel association EUROFER.

In Sydney, Prime Minister Malcolm Turnbull said there is no case for imposing tariffs on Australian steel.

Thyssenkrupp AG
21.66
TKAG.DEXETRA
+0.13(+0.60%)
TKAG.DE
TKAG.DESZGG.DE

LEGITIMATE RIGHTS

Trade tensions between Washington and Beijing have risen since Trump took office last year. China accounts for only a small fraction of U.S. steel imports, but its rapid rise to produce half the world’s steel has helped create a global glut that has driven down prices.

Beijing vowed to “firmly defend its legitimate rights and interests”. Tariffs would “seriously impact the normal order of international trade,” the Commerce Ministry said.

China’s steel and metals associations urged the government to retaliate, citing imports from the United States ranging from stainless steel to coal, agricultural products and electronics.

Last year, China imported 3.2 million tonnes of U.S. coal, worth about $420 million and nearly five times the amount it took in 2016. Trump has championed coal exports as demand from power firms at home weakens.

The dispute has fueled concerns that soybeans, the United States’ most valuable export to China, might be caught up in the row after Beijing launched an inquiry probe into imports of U.S. sorghum, a grain used in animal feed and liquor.

South Korea, the third largest steel exporter to the United States and a strategic ally on the Korean peninsula, called for calm. “We should prevent a trade war situation from excessive protectionism, in which the entire world harms each other,” Trade Minister Paik Un-gyu told a meeting with steelmakers.

While carrying a message to Washington to push forward a diplomatic breakthrough over North Korea, South Korea’s national security office chief Chung Eui-yong asked U.S. officials to support Seoul’s request for a waiver, a presidential spokesman said.

(GRAPHIC: How would Trump's tariff affect the cost of the Boeing 737? - tmsnrt.rs/2oPA3Xf)

Reporting by Adam Jourdan, Wang Jing, Yuka Obayashi, Kaori Kaneko, Ami Miyazaki, Ju-Min Park, Hyunjoo Jin, Cynthia Kim, Robert-Jan Bartunek and Alissa de Carbonnel; writing by David Stamp; Editing by Toby Chopra

REUTERS. MARCH 8, 2018. Trump sets steel and aluminum tariffs but exempts Canada, Mexico
David Lawder, Jeff Mason

WASHINGTON (Reuters) - U.S. President Donald Trump pressed ahead on Thursday with import tariffs of 25 percent on steel and 10 percent for aluminum but exempted Canada and Mexico and offered the possibility of excluding other allies, backtracking from an earlier “no-exceptions” stance.

Describing the dumping of steel and aluminum in the U.S. market as “an assault on our country,” Trump said in a White House announcement that the best outcome would for companies to move their mills and smelters to the United States. He insisted that domestic metals production was vital to national security.

“If you don’t want to pay tax, bring your plant to the USA,” added Trump, flanked by steel and aluminum workers.

Plans for the tariffs, set to start in 15 days, have stirred opposition from business leaders and prominent members of Trump’s own Republican Party, who fear the duties could spark retaliation from other countries and hurt the U.S. economy.

Within minutes of the announcement, U.S. Republican Senator Jeff Flake, a Trump critic, said he would introduce a bill to nullify the tariffs. But that would likely require Congress to muster an extremely difficult two-thirds majority to override a Trump veto.

Some Democrats praised the move, including Senator Joe Manchin of West Virginia, who said it was “past time to defend our interests, our security and our workers in the global economy and that is exactly what the president is proposing with these tariffs.”

Trump’s unexpected announcement of the tariffs last week roiled stock markets as it raised the prospect of an escalating global trade war. He appeared to have conceded some ground after concerted lobbying by Republican lawmakers, industry groups and U.S. allies abroad.

Canada, the largest supplier of both steel and aluminum to the United States, welcomed the news it would not immediately be subject to the tariffs, but vowed to keep pressing Washington until the threat of tariffs had disappeared.Trump offered relief from steel and aluminum tariffs to countries that “treat us fairly on trade,” a gesture aimed at putting pressure on Canada and Mexico to give ground in separate talks on renegotiating the North American Free Trade Agreement.

Mexican Economy Minister Ildefonso Guajardo said NAFTA talks were “independent” of Trump’s tariff actions and should not be subject to outside pressure.

In Beijing, China’s Commerce Ministry said on Friday it “resolutely opposed” the tariffs and that they would “seriously impact the normal order of international trade.”

While Chinese steel exports to the United States have been suppressed by previous anti-dumping duties, the broad “Section 232” national security tariffs are widely seen as aiming to pressure Beijing to cut excess steel and aluminum production capacity that has driven down global prices.

U.S. steel stocks, which have gained for weeks on anticipation of the tariffs, fell after the announcement, with the Standard and Poor’s composite steel index .SPCOMSTEEL ending down 2.53 percent against a half percent gain in the broad S&P 500 .SP500 index.

Century Aluminum (CENX.O) shares fell 7.5 percent, while Alcoa (AA.N) dipped 0.9 percent. The Canadian dollar and Mexican peso gained slightly against the U.S. dollar.

SEEKING CLARITY

A senior Trump administration official said other countries could seek talks with U.S. Trade Representative Robert Lighthizer to find “alternative ways” to mitigate the threat to U.S. national security posed by their steel and aluminum exports to the United States.

It was unclear whether they would involve quotas or voluntary export restraints, but the official said that permanent exemptions for Canada and Mexico might result in higher tariffs on other countries to maintain 80 percent capacity usage targets for domestic producers.

European Union Trade Commissioner Cecilia Malmstrom said: “The EU is a close ally of the U.S. and we continue to be of the view that the EU should be excluded from these measures. I will seek more clarity on this issue in the days to come.”

U.S. steel- and aluminum-consuming industries sharply criticized the tariffs as damaging them with higher costs.

“The U.S. will become an island of high steel prices that will result in our customers simply sourcing our products from our overseas competitors and importing them into the United States tariff-free,” the Precision Metalforming and National Tooling and Machining associations said in a joint statement.

Century Aluminum Co
19.27
CENX.ONASDAQ
-0.39(-1.98%)
CENX.O
CENX.OAA.NHOG.N

COUNTERMEASURES?

Several major trading partners have said they might respond to the tariffs with direct action.

Countermeasures could include European Union tariffs on U.S. oranges, tobacco and bourbon. Harley-Davidson Inc (HOG.N) motorcycles have also been mentioned, targeting Republican U.S. House of Representatives Speaker Paul Ryan’s home state of Wisconsin.

Even as Trump threatened tariffs and prodded his NAFTA partners, 11 nations gathered in Chile to sign a landmark Asia-Pacific trade pact, one that Trump withdrew from on his first day in office last year.

Trump, who won the White House after a career in real estate and reality TV, has long touted economic nationalism, promising to bring back jobs to the United States and save the country from trade deals he views as unfair. That has put him at odds with many in his Republican Party, traditionally a supporter of free trade.

(For a graphic on 'Global trade and GDP growth' click reut.rs/2FtPzhW)

(For a graphic on 'U.S. visible trade balance' click reut.rs/2Fmon8N)

(For a graphic on 'U.S. steel imports by country' click reut.rs/2Fkjb5g)

Additional reporting by Antonio De la Jara and Dave Sherwood in Santiago, Michael Martina, Elias Glenn, Kim Coghill, Brian Love, Nichola Saminather, Doina Chiacu and Andrea Hopkins; Writing by David Stamp, David Chance and David Lawder; Editing by Jonathan Oatis and Peter Cooney

BLOOMBERG. 8 March 2018. Trump Optimistic on Nafta After Canada, Mexico Dodge Metals Tariffs
By Josh Wingrove

• U.S. excludes Canada & Mexico amid talks on decades-old pact
• ‘I have a feeling we’re going to make a deal,’ president says

President Donald Trump threw his Nafta partners a bone while continuing to reframe trade talks with Canada and Mexico as a stark choice between lofty U.S. demands or steep tariffs on steel and aluminum.

In announcing a 25 percent tariff on steel and 10 percent levy on aluminum Thursday, the U.S. president exempted Canada and Mexico “at least at this time” and cited close ties between the three nations. Trump struck an unusually optimistic tone on the fate of the North American Free Trade Agreement, but repeated his threat to quit the pact if the talks fall short.

“I have a feeling we’re going to make a deal on Nafta,” Trump said at the White House alongside a group of steelworkers, citing the “unique nature of our relationship with Canada and Mexico.” But if no deal is reached in negotiations among the three countries that began in August, “then we’re going to terminate Nafta and we’ll start all over again or we’ll just do it a different way,” Trump added.

The tariffs are being applied on the grounds of national security, which the president said was a “very important aspect” of the Nafta accord that came into force in 1994.

The Mexican peso led gains among the world’s major currencies and the Canadian dollar erased its decline after Trump announced the exemptions for the two countries.

“Today is a step forward,” Chrystia Freeland, Canada’s foreign minister, told reporters in Toronto Thursday. She said Canada would push “until the prospect of these duties is fully and permanently lifted,” and said it would be inconceivable to apply tariffs to a close military ally like Canada on national security grounds.

She also downplayed a link made by Trump between Nafta and the metals tariffs, saying they were separate issues. “In terms of the Nafta negotiation, that is a completely separate issue,” Freeland said. “Our negotiating positions are absolutely unchanged.”

Trump’s proclamations on steel and aluminum called on Mexico and Canada to “take action to prevent transshipment” of steel and aluminum through their countries and into the U.S.

Mexico recognizes the problem of global steel oversupply and will keep seeking solutions, but Nafta talks shouldn’t be subject to other domestic U.S. policies, the country’s Economy Ministry said in a statement.

Nafta ‘Compromise’?

The developments Thursday cap a week of frenzied lobbying by Canada, and come after the seventh round of Nafta talks, which concluded Monday. U.S. Trade Representative Robert Lighthizer struck a relatively upbeat tone at a closing press conference in Mexico City, warning talks needed to move more quickly but saying he was open to “compromise” on U.S. proposals in hopes of getting an updated deal through the current Congress. Freeland said there was “good, solid progress” made in the recent round and that “a win-win-win deal is within reach.

The threat of tariffs hung over the negotiations in Mexico City, and Lighthizer said it was an incentive for Canada and Mexico to get a deal -- a sentiment echoed by Commerce Secretary Wilbur Ross after Trump’s announcement.

“I think there’s no question that the action the president took today is a further motivation to both Canada and Mexico to make a fair arrangement with the United States,” Ross said in an interview on CNBC.

The tariffs aren’t being imposed just as a “negotiation ploy” for updating Nafta, Ross said. “We are deadly serious” about solving what the U.S. sees as unfair trade in steel and aluminum.

Trump praised his top trade representative during his remarks Thursday, and said Lighthizer would be responsible for negotiating with countries seeking additional exemptions from the aluminum and steel levies.

— With assistance by Michael Bellusci, and Nacha Cattan

CPTPP

USDoS. March 9, 2018. Signing of the Comprehensive and Progressive Trans-Pacific Partnership. Press Statement. Rex W. Tillerson, Secretary of State

Washington, DC - Among the core principles of the Trump Administration’s economic policy are protecting American jobs, ensuring fairness and reciprocity in trade relationships, and advancing America’s international economic competitiveness. The Administration is studying how the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) will affect American workers and America’s interests in the Indo-Pacific region. The United States values its trade relationships with each of the signatories to the CPTPP and looks forward to engaging them on ways to strengthen and expand trade on the basis of fairness and reciprocity.

The Globe and Mail. THE CANADIAN PRESS. 9 Mar 2018. No special treatment for U.S. if it wants to rejoin TPP, official says
MIKE BLANCHFIELD, OTTAWA

The United States will receive no preferential treatment if it seeks to rejoin the sweeping Trans-Pacific Partnership that Canada and 10 partners signed Thursday, a senior Canadian trade official says.

The signing of the new 11country TPP marks the culmination of a massive salvage operation that kicked into gear after U.S. President Donald Trump pulled the United States out of the deal after he was sworn into the Oval Office last January.

“The United States will not receive any fast-track access to this agreement if they choose to return one day,” a senior Canadian trade official told a teleconference on Thursday from Santiago.

Despite the President’s repeated attacks on a trade deal that he said was unfair to Americans, senior Trump administration officials have said recently they’re looking at ways to possibly rejoin the pact.

That may not be so easy. The new TPP, known as the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, or CPTPP, contains 22 provisions that were suspended from the original 12-country agreement, which included the United States.

Under the terms of letting new members into the CPTPP, all 11 members would have to agree to lift those suspended provisions.

“Whether they’re a carrot or a stick depends on the eyes of the beholder,” the official said during a technical briefing for the media.

 ECONOMY

BANK OF CANADA. March 8, 2018. Canada’s Economic Expansion: A Progress Report. Remarks. Timothy Lane - Deputy Governor. Greater Vancouver Board of Trade, Vancouver, British Columbia

Introduction

I am delighted to be spending International Women’s Day here in Vancouver, a city that has long been a leader in fostering diversity, tolerance and inclusiveness.

Earlier today in Halifax, Governor Stephen S. Poloz and Finance Minister Bill Morneau unveiled the new $10 bank note, featuring a portrait of the late Viola Desmond.

Her story is an inspiring one. In 1946, Ms. Desmond, a Black Nova Scotian businesswoman, refused to leave a whites-only area of a movie theatre in New Glasgow and was jailed, convicted and fined.

She confronted this discrimination with grace and courage. And she made history, bringing forth the first known legal challenge against racial segregation by a Black woman in Canada. Her case was an inspiration for change and part of a wider set of efforts toward racial equality across the country.

The bank note will begin circulating later this year. I hope you’ll agree that its imagery and symbols reflect the progress we have made as a nation—and the road still to be travelled—in the pursuit of human rights and social justice.

Now, I will turn from these lofty themes to the main topic of my speech today: Canada’s continuing economic expansion, which has brought the Canadian economy close to its full potential. This is the setting for the monetary policy decision that we announced yesterday.

For those who may not know, we make eight decisions on the policy interest rate each year. Four of these come with the publication of our quarterly Monetary Policy Report, which provides a complete forecast and detailed explanation of how we see risks to our inflation outlook evolving. The Governor and Senior Deputy Governor hold a press conference the same day.

Until now, the other four decisions would come with only a press release—about one page long.

We’ve decided that, starting today, one member of the Bank’s Governing Council will also give a public speech—an “economic progress report”—a day or so after each of these four interest rate announcements. The idea is to shed further light on how we see the economy evolving and the considerations that figured most prominently in our deliberations.

So, this speech kicks off a new initiative—another step in our ongoing efforts to help Canadians better understand our actions and decisions as Canada’s central bank.

Now, let me begin.

Global and Canadian economic developments

The Canadian economy is progressing well. Following a decade of many setbacks, 2017 was a year of robust economic growth—3 per cent for the year as a whole.

After many years in which the growth was uneven, it has become more balanced.

The material slack that existed in the economy, and especially in the labour market, has been largely absorbed. Inflation is running close to our target rate of 2 per cent. While the future is subject to some notable uncertainties, which I’ll discuss, trends over the past few quarters have been quite encouraging. The trends have been broad-based across regions and sectors, but these favourable economic conditions are particularly evident in some parts of Canada, including British Columbia.

Global developments

Of course, Canada is a very open economy, and its growth is supported by what is now a synchronous global expansion. This too is encouraging. We are now seeing solid growth not only in the United States and China but also in Europe, as well as in many other emerging-market economies.

The US economy has been on a path of mostly solid growth and job creation for a few years. At the beginning of 2018, the data indicated stronger momentum for the United States, and the tax cuts announced just before Christmas were expected to boost demand further. Developments since then have largely supported this story. US economic growth remained robust, at an annual pace of 2.5 per cent during the fourth quarter of 2017, and the US economy is essentially at full employment, with the jobless rate at a 17-year low. Wage growth has also edged up in recent months. Meanwhile, US business confidence remains high. And increases in government spending legislated in February are likely to provide a further boost in the next couple of years.

The US economic picture still has upside potential. The current expansion could create a virtuous circle, triggering “animal spirits” among businesses and consumers and driving even faster growth than expected. If that happened, stronger business investment and household spending in the United States would likely benefit our economy. So, as always, we are watching developments in the United States closely.

On that note, we saw some sharp movements in US and global stock markets a few weeks ago, ushering in increased market volatility (Chart 1). While these shifts were clearly amplified by technical factors—and, of course, markets are prone to overreaction—the repricing reflects a shifting economic outlook.

Market expectations about the path for inflation in some major advanced economies have been shifting upward—in the United States, for example, where inflation had persistently been running short of target. The shift in expectations about inflation and the strength of the global economy brings forward, to some degree, market expectations of less stimulative monetary policy. Over time, rising bond yields in the United States can be expected to put upward pressure on yields elsewhere, including in Canada. In effect, as markets digest what the changing dynamics could mean for central banks, markets themselves are bringing about some of the tightening that would be consistent with an improving world economy.

The rise in volatility came after a long period of exceptional calm in global financial markets—not just in stock markets but also in fixed-income markets. That tranquility reflected, at least in part, the influence of monetary policy: in many advanced economies, policy interest rates have been constrained by their effective lower bounds, and their central banks have relied on unconventional tools, including quantitative easing and forward guidance. As the global economic expansion becomes more secure, we may be reaching a turning point where the volatility-suppressing effects of monetary policy are diminishing and more normal levels of volatility are returning to markets.

At the same time, the global outlook remains subject to considerable uncertainty, notably around geopolitical developments and increasing protectionism. I’ll talk more about this uncertainty a little later.

Canadian developments

Turning back to Canada, as I’ve said, 2017 was a year of robust growth for our economy.

We were expecting growth to moderate to a more sustainable pace going into 2018, and the latest National Economic Accounts data confirm that it has. In fact, growth of real gross domestic product (GDP) during the fourth quarter of 2017 slowed more than we anticipated in our January forecast. Yet, even as the annual pace of growth came in at 1.7 per cent, under the 2.5 per cent pace in our projections, the underlying details suggest that the economy is progressing much as we thought it would. Specifically, what we economists refer to as “final domestic demand” increased at around a 4 per cent pace for a fourth consecutive quarter (Chart 2).

The slower-than-expected headline GDP growth number was largely due to higher imports, while exports made only a partial recovery from their third-quarter decline. The gain in imports mainly reflected stronger business investment, which adds to the economy’s capacity. There were also some temporary factors influencing imports in the fourth quarter.

In addition, housing and government spending contributed more than expected to economic growth. On that note, we’ll incorporate the implications of the recent federal budget for the outlook for growth and inflation in the Bank’s April projection.

All that said, uncertainty about the North American Free Trade Agreement (NAFTA) and growing global trade tensions will need to be watched, for their possible impact on the outlook. Recent developments with respect to steel and aluminum, alongside increased protectionist rhetoric, carry potentially serious consequences. We do not know how or when the NAFTA talks or other trade disputes will conclude, and we do not know how industries, or governments, will react. The range of possibilities is wide, which means that trying to quantify any scenario in advance would not be useful for monetary policy purposes. For now, our working assumption is that existing trade arrangements will stay in place over our current two-year projection horizon. As and when concrete outcomes emerge, we will be in a better position to assess their impact on the Canadian economy.

But even with no changes in our trading arrangements, the uncertainty around them is affecting business investment decisions. The US tax reforms may further reduce the relative attractiveness of investing in Canada. For both these reasons, firms may decide to redirect some of their planned investment spending from Canada to the United States. Our economic projections have been incorporating the judgment that such effects are likely to dampen business investment—as discussed in January. As we prepare our April forecast, we’ll assess whether the degree of caution we’ve applied is still appropriate. An important indicator will be our spring Business Outlook Survey (BOS), which we will publish on April 9.

There are a couple of additional points to note on the export and investment picture.

First, with respect to energy exports, spot prices for crude oil have fallen since we published our January forecast, but remain relatively high compared with 2017 (Chart 3). However, Canada is not seeing the full benefit of oil’s recovery because of wider-than-average differences between benchmark global oil prices and prices for Canadian heavy oil. To the extent that these differences stem from ongoing transportation bottlenecks, we expect them to persist. This could have a dampening effect on investment in the energy sector.

In addition, although Canadian manufacturing activity has been solid in recent quarters, non-energy goods exports could disappoint, given ongoing competitiveness challenges. Indeed, in 2017, these challenges meant Canada was unable to benefit fully from a strengthening in global trade.

Another key element of our economic outlook is household spending—consumption and residential investment. In our January projection, this spending was expected to remain solid, while contributing less to growth as we go forward.

But there are a lot of moving parts. The effects of various provincial government measures in British Columbia and Ontario are still working their way through major housing markets. Federal authorities introduced new mortgage underwriting guidelines, which came into effect on January 1. And higher interest rates are also expected to dampen household spending. This effect is likely to be stronger than in the past, since the average household is now more heavily indebted.

The timing of these effects can vary and is hard to predict. For example, we expected that some home resale activity would be pulled forward into the last quarter of 2017 as buyers and sellers tried to book transactions before new underwriting guidelines took effect. The strong pace of resales late last year and the recent sizable drop (Chart 4) appear consistent with that pull-forward idea. But it’s too early to tell how all these measures—not to mention measures that the BC government announced two weeks ago—will affect housing markets over the longer term.

We will continue to watch the data closely. We will also continue to assess how sensitive consumption is to higher interest rates, given high household debt. On that front, it’s worth noting that household credit growth has been decelerating in recent months. It’s still too early to firmly call it a trend, and credit data can be volatile, but it’s what one would expect to see.

Turning to labour markets, despite a fall back in January, Canada has made considerable progress in job creation over the past year, notably with strong gains in full-time employment. The jobless rate is consequently near a historically low level (Chart 5). Wage growth has firmed, although it remains slower than would be typical in an economy with no labour market slack. Going forward, we will be monitoring the extent to which minimum-wage increases in key provinces may be affecting broader wage pressures. For now, it is a bit early to say. Meanwhile, even as regions such as British Columbia experience wage pressures and intensifying labour shortages, the elevated long-term unemployment rate and relatively low youth participation rate nationally suggest that there is still some slack in the Canadian labour market. Reflecting this, the Bank’s composite labour market indicator—which is designed to capture broad labour market developments—has fallen by less than the unemployment rate.

Now, I’d like to go into a bit more detail about inflation, both globally and in Canada.

Global and Canadian inflation dynamics

I mentioned earlier that recent developments in global financial markets would seem to reflect shifting expectations about the path for inflation in some advanced economies.

Only a few months ago, the fact that inflation in advanced economies, including the United States, the euro area and Japan, was either slowing down or remaining weak, despite material slack being absorbed, caused some to question whether the inflationary process may have structurally changed.

At a global level, there are a number of possible explanations for why inflation has been slow to pick up. For instance, there may be more leftover economic slack. Inflation expectations may have drifted lower in response to persistently low inflation. The competitive effects of the rise of the digital economy and ongoing globalization may be playing a role in holding down prices. Or it may simply be a matter of time: inflation never picks up smoothly and does not follow a mechanical process.

Our staff have been working hard to assess these possible explanations. To date, they’ve found no compelling evidence that the underlying inflationary process has changed globally. That’s not to say it hasn’t—we need to continue to study this. But for now, our view remains that key relationships remain intact. Given the depths of the post-crisis recession and varying degrees of slack in different economies, inflation has taken longer in some countries than others to materialize on a sustainable basis.

Meanwhile, here in Canada, inflation has lately been running close to our 2 per cent target. The Bank’s core measures of inflation are also edging up, as we expected.

Still, inflation in Canada will be influenced this year by temporary factors related to gasoline, electricity and minimum wages. For example, we expected that inflation would drop temporarily below 2 per cent in January because of effects from gasoline prices a year earlier (Chart 6). But the decline in inflation, to 1.7 per cent, was a bit less than we had anticipated, reflecting a number of factors. Inflation is expected to climb back to around our target in the coming months as gasoline prices pick up on a year-over-year basis.

Our latest policy decision

That brings me to yesterday’s decision to hold our policy rate, the target for the overnight rate, at 1.25 per cent.

This decision, as always, is grounded in our assessment of developments in the Canadian economy and what they mean for the outlook for inflation. In that regard, global and Canadian economic data have come in much as we expected. That confirmation gives us greater confidence that inflation will remain sustainably near our 2 per cent target.

Our decision yesterday also takes into account some important context. First, our policy rate remains appropriately below what we call the normal, or neutral, rate—the policy rate that would balance the economy in the longer run. We’ve estimated the neutral rate to be in the region of 2.5 to 3.5 per cent. I say it’s appropriately below because accommodative monetary policy is working to offset several factors weighing on demand: persistent competitiveness challenges facing Canadian exports, the chilling effect of heightened uncertainty about future US trade policies, and the burden of high household debt levels.

The second piece of context is that, starting last summer, we increased our policy interest rate three times, for a total of 75 basis points. In these moves, we’ve been balancing the risk of undermining the economic expansion by moving too quickly with the risk of delaying too long and needing to raise rates sharply later to rein in inflation.

By moving gradually, we’ve been able to take in new data and conduct analysis on four key issues. First, when an economy is running close to full capacity, it can actually create more capacity as firms invest and discouraged workers are drawn back into employment. Second, as I’ve already discussed, inflation dynamics could be changing in the new economy, and it’s important to understand those dynamics. Third, despite strong employment gains and an economy operating close to capacity, wage growth has been slower than would be expected. And, finally, with household debt at high levels, the economic effects of interest rate increases could be different than in the past.

In our deliberations for yesterday’s decision, we took stock of recent developments related to these issues. As job creation has absorbed slack in the labour market, we have started to see wages pick up. With respect to the impact of higher interest rates on housing markets and the economy, although it is still too early to make a full assessment, we have seen a deceleration in household borrowing. And while it’s also too early to tell how much additional potential output in the economy is being created, last week’s strong investment figures are encouraging. We will be providing a fuller assessment of potential growth, as well as of the neutral interest rate, in our April Monetary Policy Report.

Conclusion

Allow me to conclude. All things considered, we decided yesterday that the current policy rate remains appropriate. While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target. My Governing Council colleagues and I will remain cautious in considering future policy adjustments, guided by incoming data in assessing the economy’s sensitivity to interest rates, the evolution of economic capacity, and the dynamics of both wage growth and inflation.

Rest assured that, as always, the Bank of Canada will continue to do our part to ensure that we safeguard, and build on, the progress that has been made so far.

I would like to thank Eric Santor and Garima Vasishtha for their help in preparing this speech.

FULL DOCUMENT: https://www.bankofcanada.ca/wp-content/uploads/2018/03/remarks-080318a.pdf

The Globe and Mail. 9 Mar 2018. BoC upbeat on trade, interest rate pressures on economy
BARRIE McKENNA, OTTAWA
DAVID EBNER, VANCOUVER

Canada’s economy is “progressing well” in the face of protectionist threats and the impact of higher interest rates on heavily indebted consumers and homeowners, a top Bank of Canada official says.

“While the future is subject to some notable uncertainties … trends over the past few quarters have been quite encouraging,” deputy Governor Timothy Lane said on Thursday in an early afternoon speech to the Vancouver Board of Trade.

Mr. Lane spoke less than an hour after news emerged that Canada would officially receive a temporary exemption from new U.S. tariffs on steel and aluminum imports. He called the news “encouraging.”

Afterward, speaking with reporters, he underlined how quickly the news around steel has shifted in only a few days.

“It’s still a pretty fluid situation and I would say we’re not in a situation of calling all clear,” he said.

“I would say there’s still a significant degree of uncertainty around the future trade regime.”

During his speech, Mr. Lane said that despite a marked slowdown in economic growth at the end of 2017, the Canadian economy, over all, is “progressing much as we thought it would.” He cited solid global economic growth, the historically low jobless rate and a nascent uptick in wages among the positives.

His relatively upbeat remarks come a day after the central bank opted to keep its benchmark interest rate at 1.25 per cent. The Bank of Canada has raised rates three times since last July.

Moving gradually on rate hikes is giving the bank time to take stock of new economic data and a host of uncertainties, he explained.

“We’ve been balancing the risk of undermining the economic expansion by moving too quickly with the risk of delaying too long and needing to raise rates sharply later to rein in inflation,” Mr. Lane said.

Many analysts who had been expecting as many as three more rate hikes this year now say the central bank may raise rates just one more time in 2018 and remain on hold for the next several months.

Mr. Lane acknowledged that the bank’s main interest rate, which sets the trend for shortterm interest rates throughout the economy, remains well below the neutral level of 2.5 per cent to 3 per cent – the point where interest rates neither spur economic activity nor put the brakes on growth.

Right now, the bank’s main interest rate is set “appropriately” low to offset a spate of challenges, including U.S. protectionist threats, the fate of the North American free-trade agreement, competitive challenges facing Canadian exports and the weight of high household debt levels, he said.

He added that the bank is closely watching the continuing NAFTA talks and growing global trade tensions.

“Recent developments with respect to steel and aluminum … alongside heightened protectionist rhetoric, can potentially carry quite serious economic consequences,” he said.

Canada is the United States’ largest supplier of steel and aluminum.

Mr. Lane said the outcomes of U.S. trade policies are too uncertain to quantify.

“Our working assumption is that existing trade arrangements will stay in place over our twoyear projection horizon,” he said. “When concrete outcomes emerge, we will be in a better position to assess their impact on the Canadian economy.”

Nonetheless, trade uncertainty coupled with recent U.S. tax cuts are already acting as a chill on investment in Canada, he said. The result is likely to “dampen” business investment as companies redirect spending to the United States, he pointed out.

Mr. Lane also suggested investors should brace for more volatility in financial markets as central banks end years of ultralow interest rates.

“We maybe reaching a turning point where the volatility sup pressing effects of monetary policy are diminishing and more normal levels of volatility are returning to markets,” he said.

BLOOMBERG. 8 March 2018. Bank of Canada Upbeat on Economy, Remains Cautious on Rates
By Theophilos Argitis

• Material slack in the labor market has been largely absorbed
• Central bank needs to be cautious not to thwart recovery

The Bank of Canada released an upbeat assessment of the country’s economic expansion, but reiterated the central bank will remain cautious as it seeks to bring interest rates back up to more normal levels.

The outlook was delivered in a speech by Deputy Governor Tim Lane, a day after an interest-rate decision where the central bank left borrowing costs unchanged. The aim of the speech was to outline “the considerations that figured most prominently” in the rate deliberations, Lane said.

Global and Canadian economic data has come in largely as expected, Lane said, bolstering policymakers’ confidence that inflation will remain near the Bank of Canada’s 2 percent target. Still, Lane said the central bank’s policy rate remains appropriately below neutral given “accommodative monetary policy is working to offset several factors weighing on demand.”

“We’ve been balancing the risk of undermining the economic expansion by moving too quickly with the risk of delaying too long and needing to raise rates sharply later to rein in inflation,” Lane said.

Like central banks elsewhere, the Bank of Canada has been trying to figure out how to bring historically low interest rates to more normal levels, without inadvertently triggering another downturn. The central bank estimates that its neutral interest rate -- a rate that keeps the economy neither too hot nor too cold -- is between 2.5 percent and 3.5 percent, versus its current policy rate of 1.25 percent.

Traders aren’t fully pricing in the next rate increase -- which would be the fourth in the cycle -- until July, according to Bloomberg calculations on overnight index swaps. The market expects two to three more hikes this year, with the odds favoring two.

The Bank of Canada has already increased borrowing costs three times since July, as the economy runs up against capacity.

Little Slack

Lane said material slack in the economy, “especially” in the labor market, has been largely absorbed and he downplayed concerns about a growth slowdown at the end of last year. Later in the speech, he said the “elevated long-term unemployment rate” and “relatively low youth participation rate” suggests there is still “some slack” in the Canadian labor market.

He tempered the optimism with a list of uncertainties that threaten the outlook. These include everything from a growing protectionist threat in the U.S. to persistent competitiveness challenges for exporters to worries about how highly indebted households will react to higher interest rates.

A cautious approach to interest rates is allowing the bank to assess how the normalization process is moving, including the possibility the expansion is driving investment higher and generating more capacity for the economy to grow without fueling inflation.

U.S. Expansion

Lane was particularly upbeat about the U.S. economic expansion that he said was “solid” and “robust,” with the potential the economy still has upside if it creates a virtuous circle by fueling business and household confidence.

Recent market volatility, which he said may have been amplified by technical factors, also reflects a repricing to a faster expected path for inflation in some economies, Lane said.

Rising bond yields in the U.S. “can be expected” to put pressure on yields elsewhere, including Canada, which could act as a tightening in financial conditions.

More Highlights

• Canada’s economy is running close to full potential and is “progressing well”
• Recovery has become more balanced and broad-based
• On recent market repricing: “In effect, as markets digest what the changing dynamics could mean for central banks, markets themselves are bringing about some of the tightening that would be consistent with an improving world economy”
• Global outlook remains subject to considerable uncertainty
• Even with slowdown at end of 2017, underlying details of Canadian GDP suggest the economy is progressing much as central bank thought, with Lane citing strong domestic demand numbers
• Recent developments on steel and aluminum could have serious consequences
• The range of possibilities on trade is wide, and trying to quantify impact would not be useful. Working assumption is existing trade arrangements will stay in place
• Still, uncertainty is affecting business investment and U.S. tax reform may further reduce attractiveness of Canada, Lane said. Policy makers will be looking closely at next Business Outlook Survey
• By moving gradually, central bank can assess a number of things: whether economy is creating new capacity, inflation dynamics, wage growth and interest rate sensitivity

G-7

March 9, 2018. Media Accreditation now open for the G7 Ministerial on Preparing for Jobs of the Future

Ottawa, Ontario — The Honourable Patty Hajdu, Minister of Employment, Workforce Development and Labour, and the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, will host the Meeting of Employment and Innovation Ministers of the G7, “Preparing for Jobs of the Future” on March 27-28, 2018, in Montréal, Québec, Hotel Bonaventure Montréal 900 Rue de la Gauchetière W., Montréal, Québec

DoS. March 9, 2018. Under Secretary Shannon Participates in G-7 Political Directors' Meeting

Washington, DC - Under Secretary of State for Political Affairs Thomas A. Shannon, Jr. will travel to Ottawa, Canada, March 11–12, to participate in the G-7 Political Directors’ meeting. Canada holds the G-7 presidency for 2018.

Under Secretary Shannon’s engagement with his G-7 counterparts in Ottawa will prepare for the Foreign Ministers’ meeting in April and the Leaders’ Summit in June. The G-7 annually brings together representatives of the world’s leading industrialized democracies to address domestic and international priorities.

EMPLOYMENT

StatCan. 2018-03-09. Labour Force Survey, February 2018

• Employment — Canada: 18,573,000, February 2018, 0.1% increase (monthly change)
• Unemployment rate — Canada: 5.8%, February 2018, -0.1 pts decrease (monthly change)
• Source(s): CANSIM table 282-0087: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=2820087&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=

Employment was little changed in February (+15,000). The unemployment rate declined by 0.1 percentage points to 5.8%.

On a year-over-year basis, employment grew by 283,000 or 1.5%. All of this increase was attributable to gains in full-time work (+283,000 or +1.9%), while part-time employment was unchanged. Over the same period, hours worked rose by 3.2%.

Highlights

In February, employment increased for both men and women in the core working age group (25 to 54), while there was little change for youth aged 15 to 24 and for people aged 55 and older.

Employment increased in New Brunswick and Nova Scotia, while it decreased in Saskatchewan. There was little change in the other provinces.

Employment gains were observed in several industries, led by health care and social assistance. At the same time, employment declined in a number of other industries, including wholesale and retail trade, and manufacturing.

The number of employees increased in the public sector, while it held steady in the private sector. The number of self-employed workers decreased.

Chart 1: Employment

Chart 2: Unemployment rate

More core-aged people working

Among the core-aged population, employment rose by 41,000 (+0.3%) in February. Increases were similar for both men (+22,000 or +0.3%) and women (+19,000 or +0.3%). The unemployment rate for the core-age group was 4.9% for the third consecutive month. On a year-over-year basis, the unemployment rate for core-aged men and women was down 0.6 percentage points. Over the same period, employment for core-aged men increased by 99,000 (+1.6%), while it was virtually unchanged for women in this age group.

Employment was little changed for both men and women aged 55 and older. The unemployment rate among older women fell by 0.3 percentage points to 4.3%, while it was little changed for older men at 5.7%. Compared with 12 months earlier, employment in this age group increased by 111,000 (+6.5%) for women and by 48,000 (+2.3%) for men.

For youth aged 15 to 24, both the level of employment and the unemployment rate were little changed in February. On a year-over-year basis, their unemployment rate declined by 1.3 percentage points to 11.1% as fewer youth searched for work.

Employment little changed in most provinces

Employment increased by 5,100 (+1.5%) in New Brunswick in February, driven by gains in full-time work. The unemployment rate fell 0.9 percentage points to 8.2%. On a year-over-year basis, employment in the province was little changed.

In Nova Scotia, employment rose by 2,800 (+0.6%), entirely due to increases in full-time work. The unemployment rate was little changed at 7.9%. Compared with 12 months earlier, employment in the province increased by 10,000 (+2.3%).

Employment fell by 2,900 (-0.5%) in Saskatchewan, and the unemployment rate was 5.6%. On a year-over-year basis, employment declined by 8,200 (-1.4%).

Overall employment in British Columbia changed little in February, as full-time declines were mostly offset by part-time increases. On a year-over-year basis, employment in the province rose by 40,000 (+1.6%), entirely due to increases in part-time work.

In both Ontario and Quebec, employment was little changed in February. The unemployment rate was 5.5% in Ontario and 5.6% in Quebec. Compared with 12 months earlier, employment was up by 114,000 (+1.6%) in Ontario and by 74,000 (+1.8%) in Quebec. Meanwhile, the unemployment rate fell by 0.7 percentage points in Ontario and by 0.8 percentage points in Quebec.

Chart 3: Unemployment rate by province, February 2018

Industry perspective

Employment in health care and social assistance increased by 25,000 in February. Compared with 12 months earlier, employment was little changed.

In the "other services" industry, employment rose by 17,000 in the month, but was little changed on a year-over-year basis. "Other services" include services such as repair and maintenance.

Continuing an upward trend that began in early 2016, the number of people employed in transportation and warehousing increased by 13,000 in February. Compared with 12 months earlier, employment in this industry grew by 48,000 (+5.1%).

Employment increased by 12,000 in educational services, while it changed little compared with February 2017.

In public administration, employment rose by 9,000 in February, little changed from 12 months earlier.

There were 7,600 more people working in natural resources in February, bringing year-over-year employment growth to 11,000 (+3.4%). Employment in this industry has been trending upwards since the second half of 2016.

Employment in wholesale and retail trade declined by 22,000 in February. Despite this decrease, employment was up 36,000 (+1.3%) on a year-over-year basis.

In manufacturing, employment declined by 17,000 in February, but increased by 71,000 (+4.2%) compared with 12 months earlier.

The number of people working in professional, scientific and technical services was down by 12,000. On a year-over-year basis, there was little change in employment in this industry.

The finance, insurance, real estate, rental and leasing industry saw a decrease in employment of 12,000 in February, but no change from 12 months earlier.

The number of public sector employees rose by 50,000 in February, following a decline in the previous month. The number of private sector employees was little changed. On a year-over-year basis, the number of employees increased in both the private (+99,000 or +0.8%) and public (+92,000 or +2.5%) sectors.

Self-employment declined by 43,000 in February. Compared with 12 months earlier, the number of self-employed workers increased by 92,000 (+3.3%).

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/180309/dq180309a-eng.pdf

REUTERS. MARCH 9, 2018. Canadian economy adds jobs in February, but full-time positions shrink
David Ljunggren

OTTAWA (Reuters) - The Canadian economy added 15,400 jobs in February after a big loss in January but full-time positions shrank and wage growth decelerated, prompting analysts to predict the Bank of Canada will be in no rush to raise rates.

Statistics Canada said on Friday the unemployment rate dipped to 5.8 percent from 5.9 percent in January.

Analysts in a Reuters poll had forecast employment would increase by 20,000 after Canada shed 88,000 positions in January, the most in nine years.

The mixed nature of the data is likely to reinforce the Bank of Canada’s cautious stance on interest rates after it stayed on the sidelines on Wednesday.

“This is about as close to neutral a jobs report can get in Canada ... It will keep (the Bank of Canada) with a tightening bias but with no urgency to move quickly,” said Doug Porter, chief economist at BMO Capital Markets.

Bank of Canada Deputy Governor Timothy Lane said on Thursday the central bank is not on a preset course regarding interest rates, adding it will view future rate moves cautiously and assess incoming data.

The Canadian dollar rose slightly to C$1.2835 to the U.S. dollar, or 77.91 U.S. cents, from C$1.2880, or 77.64 U.S. cents. Separately, data showed U.S. job growth surged in February, recording its biggest increase in more than 1-1/2 years.

February’s gains in Canada were all in the part-time sector, which added 54,700 positions, while the full-time sector shed 39,300 jobs. Average hourly wages for permanent employees rose by 3.1 percent from last February, down from the 3.3 percent year-over-year increase in January.

Andrew Kelvin, senior rates strategist at TD Securities, noted the loss of full-time jobs and slowing wage growth.

“It was a little bit on the weak side and to us sits with a more gradual pace to tightening by the Bank of Canada,” he said by phone.

On a year-over-year basis, employment rose by 282,500, or 1.5 percent, while the six-month average for employment growth was 19,000, down from 20,100 in January.

Separately, Statscan said industrial capacity hit a 10-year high. Capacity utilization rose to 86.0 percent, the most since the 86.0 percent posted in the second quarter of 2007. Analysts in a Reuters poll had predicted a rate of 85.2 percent.

Additional reporting by Fergal Smith, Nichola Saminather and John Tilak in Toronto; Editing by Jeffrey Benkoe

BLOOMBERG. 9 March 2018. Canada’s Jobless Rate Returns to a Four-Decade Low
By Theophilos Argitis

Canada’s unemployment rate returned to the lowest in four decades in February as hiring posted a modest rebound.

Canada added 15,400 jobs during the month, Statistics Canada reported Friday, close to economist forecasts for a 21,000 gain. The unemployment rate fell to 5.8 percent from 5.9 percent, back to the December level that was the lowest in records back to 1976.

The numbers are consistent with a tight labor market with little slack left after Canada’s strong economic performance last year prompted a hiring boom. While the February gain is below monthly averages over the past year, it’s more in line with what would be considered normal for an economy the size of Canada.

One negative in the report was that the gains in February were driven by part-time employment, which was up 54,700 jobs. Full- time work was down by 39,300. Full-time employment has been responsible for the bulk of the job boom, totaling almost half a million jobs over the past 18 months.

Wage growth, which accelerated to the fastest since 2015 in January, also slowed somewhat but remains still above the average over the past year.

Highlights of February Jobs Report

• Annual wage gains decelerated to 3.1 percent in February, after reaching 3.3 percent a month earlier. Wage increases for permanent workers also decelerated to 3.1 percent from 3.3 percent
• Hours worked in February were 3.2 percent higher from a year earlier, which is up from a pace of 2.8 percent in January
• The gain in February was driven by services-producing industries, particularly health care and education. Manufacturing recorded a drop of 16,500 workers during the month
• Ontario, which recorded a large drop in employment last month after the province hiked minimum wages, led the increase in February with 15,700 new jobs

— With assistance by Erik Hertzberg

INDUSTRY

StatCan. 2018-03-09. Industrial capacity utilization rates, fourth quarter 2017

• Industrial capacity use: 86.0%, Fourth quarter 2017, 0.9 pts increase (quarterly change)
• Source(s): CANSIM table 028-0002: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=0280002&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=

Canadian industries operated at 86.0% of their production capacity in the fourth quarter, up from 85.1% the previous quarter. This was the sixth consecutive quarterly increase.

The mining, quarrying, and oil and gas extraction sector and the construction sector were the main sources of the increase.

Chart 1: The industrial capacity utilization rate continued to climb 

Construction and oil and gas extraction are the main contributors to the increase

Construction and oil and gas extraction were the main contributors to the overall increase in the capacity utilization rate in the fourth quarter.

The capacity utilization rate in construction rose for a sixth consecutive quarter, up from 89.5% in the third quarter to 91.0% in the fourth quarter. This gain was attributable to an overall increase in construction activity.

After a pause in the previous quarter, the capacity utilization rate in oil and gas extraction rose by 1.5 percentage points to 83.0%, because of an increase in the volume of oil extraction.

In forestry and logging, the capacity utilization rate rose from 83.9% to 84.5% in the fourth quarter, the first gain following four consecutive quarters of decline. This increase was attributable to increased activity in the industry.

Capacity utilization for manufacturing rises due to durable goods

After a pause in the previous quarter, the capacity utilization rate for manufacturing edged up 0.7 percentage points to 86.1% in the fourth quarter, the highest level since the fourth quarter of 2000. Durable goods manufacturing industries were the main contributors to this increase.

Chart 2: Capacity utilization in manufacturing sector bounced back

Among transportation equipment manufacturers, the capacity utilization rate was 83.6%, up from 81.9% in the previous quarter. Motor vehicle manufacturing and motor vehicle parts manufacturing, as well as aerospace product and parts manufacturing, were the main contributors to the increase. Motor vehicle production recovered after a weak third quarter, which saw longer than usual maintenance shutdowns in assembly plants and changes to vehicle models being manufactured in Canada.

Capacity utilization rates in the primary metal manufacturing industry increased for the third consecutive quarter, up 2.6 percentage points to 82.7%. An overall rise in production in the industry's subsectors led to this increase.

After declining by 1.0 percentage points in the second quarter, the capacity utilization rate in the wood product manufacturing industry posted its fifth increase in six quarters, rising from 90.3% in the third quarter to 94.5% in the fourth quarter. This rise was attributable to an overall increase in production.

The overall increase in the manufacturing sector was partly offset by decreases, particularly in the chemical manufacturing industry.

Among chemical manufacturers, industrial capacity utilization decreased for the second time in four quarters, falling from 91.5% to 88.1%. Production dropped in the majority of the subsectors of this industry.

Annual average capacity utilization increases in 2017

The average capacity utilization rate of Canadian industries rose by 4.4 percentage points to 84.6% in 2017, after edging down 0.3 percentage points in 2016. The rise was mainly attributable to the rebound in the oil and gas extraction subsector.

With the exception of forestry and logging, the annual average capacity utilization rate in non-manufacturing industries increased in 2017.

In 2017, the annual average capacity utilization rate for manufacturing bounced back to 85.2%, after edging down 0.2 percentage points in 2016. The capacity utilization rate rose in 18 of the 21 major manufacturing groups.

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/180309/dq180309b-eng.pdf

ENERGY

StatCan. 2018-03-09. Crude oil and natural gas: Supply and disposition, December 2017

• Production of crude oil and equivalent products: 22.4 million cubic metres, December 2017, 9.4% increase (12-month change)
• Exports of crude oil and equivalent products: 16.2  million cubic metres, December 2017, -3.3% decrease (12-month change)
• Source(s): CANSIM table 126-0003: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=1260003&&pattern=&stByVal=1&p1=1&p2=31&tabMode=dataTable&csid=

Canada produced 22.4 million cubic metres (141.2 million barrels) of crude oil and equivalent products in December, surpassing the record high of 21.6 million cubic metres (135.6 million barrels) reported in August 2017.

Crude oil production

Production of crude oil and equivalent products in December was up 9.4% from the same month a year earlier. With the exception of heavy crude oil (-2.6%), all types of crude oil production were up in December: non-upgraded production of crude bitumen (+9.2%), synthetic crude oil (+10.1%) and light and medium crude oil (+9.1%).

Chart 1: Production of crude oil and equivalent products

Production of conventional and non-conventional crude oil

In December, crude oil production (excluding equivalent products) totalled 20.7 million cubic metres. Non-conventional crude oil production, which consists of non-upgraded crude bitumen and synthetic crude oil, increased 9.6% from the same month a year earlier to 14.5 million cubic metres.

Conventional production of light, medium and heavy crude oils rose 5.1% to 6.2 million cubic metres in December.

Chart 2: Production of conventional and non-conventional crude oil 

Provincial production

Alberta produced 18.3 million cubic metres of crude oil and equivalent products in December, up 11.3% from the same month a year earlier, and accounting for 81.7% of total Canadian production. Saskatchewan (10.9%) and Newfoundland and Labrador (5.0%) were also key producing provinces.

Refinery use of crude oil

Input of crude oil to Canadian refineries totalled 8.8 million cubic metres in December, up 8.4% from the same month a year earlier. Conventional crude oil accounted for 64.3% of the total, while non-conventional crude oil represented the remaining 35.7%.

Exports and imports

Year-over-year exports of crude oil and equivalent products were down for the second consecutive month, falling 3.3% from December 2016 to 16.2 million cubic metres. Despite the year-over-year decrease, exports in December were slightly above the average export volume (16.0 million cubic metres) reported for the previous 11 months of 2017. Repairs to a United States pipeline leak in November contributed to the return to more normal export volumes in December.

The vast majority of exports (89.2%) were transported via pipelines to the United States, while exports by other means (including rail, truck, and marine) to the United States accounted for the remaining 10.8%. There were no exports to countries other than the United States.

Imports to Canadian refineries were up 18.9% from December 2016, to 2.9 million cubic metres.

Chart 3: Exports and imports of crude oil and equivalent products

Closing inventories

Closing inventories of crude oil and equivalent products were up 1.9% from the same month a year earlier to 19.4 million cubic metres in December.

Natural gas production

Marketable natural gas production in Canada totalled 15.0 billion cubic metres in December, up 5.9% from the same month a year earlier. Canadian production of natural gas was concentrated in Alberta (70.0%) and British Columbia (27.9%).

Additional information on natural gas is available in "Natural gas transmission, storage and distribution," published in The Daily on February 23, 2018.

2017 annual review

In 2017, production of crude oil and equivalent products increased 8.2% from 2016 to 243.7 million cubic metres. This was the largest recorded year-over-year increase since the series began in 1985. Upgrades of production facilities and the recovery from the Fort McMurray wildfire in May and June 2016, contributed to the year-over-year rise.

The overall increase in production was driven by non-upgraded crude bitumen (+10.4%), synthetic crude (+10.3%) and equivalents (+17.0%).

Non-conventional production of crude oil, consisting of non-upgraded crude bitumen plus synthetic crude, increased 10.3% to 155.1 million cubic metres. This accounted for 68.8% of total crude (excluding equivalents) in 2017, compared with 67.1% in 2016.

Despite an increase in conventional production of light, medium, and heavy crude oils (up 1.8% to 70.3 million cubic metres) in 2017, conventional production continued to decline in terms of its share of total production (excluding equivalents), falling from 32.9% in 2016 to 31.2% in 2017.

Chart 4: Production of conventional and non-conventional crude oil (excluding equivalents)

Over the last five years, production of crude oil and equivalent products has risen by 20.4%, with the main contributor being crude bitumen, up 62.8%. Meanwhile, conventional production of light, medium, and heavy crude oils decreased 12.4%.

Both exports and imports of crude oil and equivalent products rose from 2016. Exports were up 6.5% to 192.5 million cubic metres, while imports by Canadian refineries rose 5.2% to 35.5 million cubic metres. Of the total 243.7 million cubic metres of crude oil and equivalents products production, 79.0% was exported in 2017, compared with 80.3% in 2016.

Canadian natural gas utilities received 166.3 billion cubic metres of total marketable gas in 2017. During the same period, exports of natural gas from Canada to the United States totalled 84.7 billion cubic metres, while imports reached 24.3 billion cubic metres.

FULL DOCUMENT: http://www.statcan.gc.ca/daily-quotidien/180309/dq180309c-eng.pdf

BUDGET

Department of Finance Canada. March 9, 2018. Minister Morneau Takes Canada's Plan for a Strong Economy to New York City

New York, New York – Making sure every Canadian has a real and fair chance at success is not just the right thing to do, it is the smart thing to do. Canada's future prosperity depends on it. With a strong and growing economy in place, now is the right time to make progress in Canada and around the world, where everyone can contribute to, and share in, the country's prosperity.

Today, Finance Minister Bill Morneau spoke at the Penn Club of New York about how Canada's 2018 budget advances the Government's plan for middle class progress with new investments to promote equality and to create new opportunities for the middle class. Minister Morneau called on all countries to ensure everyone has the opportunity to fully contribute to the economy so that they can better face the challenges of today and tomorrow.

Canada and the United States have built one of the most productive, interconnected and enduring relationships in the world—one that has led to shared prosperity and a better quality of life for millions of middle class families in both countries.

Since 2016, Canada has led all Group of Seven (G7) countries in economic growth and Canadians are feeling more confident about the future—whether their plan is to save for a first home, pay down their debt, or go back to school to train for a new job. As a result, the Government is investing in the things that matter to Canadians, while making steady improvements to its bottom line.

Canada's strong fiscal fundamentals—anchored by a low and consistently declining debt-to-GDP (gross domestic product) ratio—mean that the Government has the capacity to make the investments that will strengthen and grow the middle class, and lay a more solid foundation for our children's future.

Canada's economy—Canada's success—is deeply tied to women's opportunity to work, and to earn a good living from that work. Through Budget 2018, the Government of Canada is leading by example in promoting gender equality by proposing:

• A legislated "equal-pay-for-work-of-equal-value" regime in federally regulated sectors covering approximately 1.2 million employees.  
• A new Employment Insurance (EI) Parental Sharing Benefit, which will provide additional weeks of "use it or lose it" EI parental benefits, when both parents agree to share parental leave.
• To provide Canadians with more information on the pay practices of employers in the federally regulated sector, helping to shine a light on employers who lead in equitable pay practices, while also highlighting wage gaps. 
• To support the advancement of women in senior positions by publicly recognizing corporations that are committed to promoting women to senior management and board positions.
• A new Gender Results Framework to support equal opportunity for all Canadians, backed by new investments to achieve equality in the workforce and at home.
• A new Women Entrepreneurship Strategy to encourage greater participation by women in the economy, and help more women-owned companies grow into world-class businesses.

Quote

"Providing Canadians with the opportunity to realize their full potential isn't just the right thing to do. It's the smart thing to do for the economy. Simply put, equality between Canadian women and men will lead to greater prosperity and a better quality of life—not just for women and their families, but for all Canadians. And with equality of opportunity as a guiding principle, Budget 2018 proposes a comprehensive range of measures to ensure every Canadian has an equal and fair chance at success."

- Bill Morneau, Minister of Finance

FULL DOCUMENT: https://www.fin.gc.ca/n18/18-017-eng.asp

Employment and Social Development Canada. March 9, 2018. Budget 2018: Sharing parental leave for a stronger middle class

Brampton, Ontario - Canadian women and men deserve to be equal partners in society and equal participants in the economy. When we have gender equality both at home and at work, families thrive and our economy flourishes.

That is why today, the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, was in Brampton to highlight the Government of Canada’s new Employment Insurance (EI) parental sharing benefit to encourage both parents in two-parent families—including adoptive and same-sex couples—to share equally in the work of raising their kids. Soon, two-parent families who share parental leave could receive an additional five weeks of leave, making it easier for women to return to work sooner, if they choose.

This is part of the Government of Canada’s commitment to finally closing the gender wage gap in our country. This Government recognizes that part of this gap is due to the fact that caregiving duties disproportionately fall to women.

While a shift to more equal parenting is an important tool to reduce the gender wage gap, it must also be part of a broader array of policy tools, such as the Government’s investments in early learning and child care, better training and financing for learning, proactive pay equity, pay transparency, supporting women to enter highly-paid skilled trades and STEM positions, and the continued appointment of skilled, talented women to leadership positions.

When women have equal opportunities to succeed they can be powerful agents of change—driving strong economic growth and improving the quality of life for their families and their communities.

Quotes

 “Providing Canadians with the opportunity to realize their full potential isn’t just the right thing to do, it's the smart thing to do for our economy. By promoting equality and extending parental leave, this Budget will help to create long-term prosperity for every Canadian.”

– The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development

FULL DOCUMENT: https://www.canada.ca/en/employment-social-development/news/2018/03/budget-2018-sharing-parental-leave-for-a-stronger-middle-class2.html

Employment and Social Development Canada. March 8, 2018. Budget 2018: Historic investments for gender equality and a stronger middle class

Surrey, British Columbia - The Government of Canada is committed to breaking down barriers to gender equality in education, employment and entrepreneurship, so that women and girls can contribute to and benefit from Canada’s success and prosperity.

When women have equal opportunities to succeed, they are powerful agents of change—driving strong economic growth, bringing new perspectives, and improving the quality of life for their families and their communities.

Today, on International Women’s Day, the Honourable Carla Qualtrough, Minister of Public Services and Procurement, was in Surrey to discuss how investments in Budget 2018 help the Government take the steps needed to enable the broader participation of women in the workforce and build an economy that works for everyone.

Through Budget 2018, the Government is taking a leadership role in addressing some of the long-standing barriers to gender equality. Some measures include confirming that this year it will introduce proactive pay equity for workers in federally regulated sectors, announcing enhanced parental leave flexibility and introducing a whole-of-government tool called the Gender Results Framework, which will guide government priorities and measure progress in achieving gender equality.

Through Budget 2018, the Government proposes to take additional important steps towards gender equality, such as:

• investing $3 million over five years to support pay transparency requirements in federally regulated sectors;
• introducing a new Employment Insurance Parental Sharing Benefit that will provide up to five additional weeks of Employment Insurance parental benefits when parents—including adoptive and same-sex couples—agree to share parental leave;
• increasing support for women-led businesses under a new Women Entrepreneurship Strategy by, among other actions, making available $1.65 billion over three years in new financing for women entrepreneurs through the Business Development Bank of Canada and Export Development Canada and providing $105 million to the regional development agencies over five years to deliver nationally coordinated and regionally tailored support for women entrepreneurs;
• building on Canada’s Feminist International Assistance Policy and providing an additional $2 billion over five years to help those in need around the world; and
• investing $19.9 million over five years to pilot a new Apprenticeship Incentive Grant for Women, to encourage women’s increased representation in male-dominated—and better-paid—Red Seal trades.

The Government is also helping families that need it most, including many led by single mothers, by proposing to make the Canada Child Benefit even stronger so that it keeps pace with the rising cost of living as of July of this year – that is, two years ahead of schedule. Over 3.3 million families are receiving more than $23 billion in annual CCB payments, helping them invest in the things that give children a good start in life—like a safe place to live, healthy food, music lessons or sports camps.

With equality of opportunity as a guiding principle, Budget 2018 takes the next steps in the Government’s plan to create good, well-paying jobs, improve lives and grow the economy for all Canadians.

Quotes

“Our government is inspired by a simple but powerful idea, providing Canadians with the opportunity to realize their full potential. As we celebrate International Women’s Day, we want to empower women through our leadership on reducing the gender wage-gap, our commitment to the Canada Child Benefit and our support for increased participation of women in the labour force.”

– The Honourable Carla Qualtrough, Minister of Public Services and Procurement

________________

LGCJ.: