CANADA ECONOMICS

US TARIFFS ON STEEL AND ALUMINIUM

Innovation, Science and Economic Development Canada. March 8, 2018. Minister Bains to defend Canadian steel industry at round table in Brampton

Ottawa, ON — The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, on March 9, 2018, 11:00 a.m., will be available to take questions from the media following a round-table discussion on Canada’s steel industry.

Innovation, Science and Economic Development Canada. March 7, 2018. Minister Bains to defend Canadian aluminum industry at round table in Montréal

Ottawa, ON — The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, on March 8, 2018, 11:30 a.m., will be available to take questions from the media following a round-table discussion on Canada’s aluminum industry.

Innovation, Science and Economic Development Canada. March 8, 2018. Minister Bains defends Canadian aluminum jobs. Canada’s world-class aluminum producers are important contributors to our economy

Montréal, Quebec - The Government of Canada defends Canada’s aluminum workers and aluminum industry.

That was the key message delivered today by the Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, at a round table of aluminum stakeholders in Montréal.

Minister Bains said that Canada’s aluminum producers are world-class and important contributors to our economy and manufacturing supply chains.

Canada is in discussion with other countries in the G20 to ensure the economic security of the industry and to protect Canadian producers.

The government understands that the Canadian and American industries are part of an integrated North American market. This two-way trade is essential to the health of the producers and manufacturing supply chains on both sides of the border. We will continue to engage with the U.S. to preserve this open trade.

Our countries should work together to meet these challenges and to increase opportunities for companies and workers on both sides of the border.

Quotes

“Canada’s aluminum industry sustains thousands of good, middle-class jobs in communities across our country. Our government will defend and champion this important sector and its workers.”

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

Quick facts

• As key allies and partners in NORAD and NATO, Canada and the U.S. are integral to each other’s security.
• Canada is a safe and secure supplier of aluminum to the U.S. defence industry. In fact, Canada is recognized in U.S. law as a part of the U.S. National Technology and Industrial Base related to national defence.
• Any duties on Canadian aluminum would directly harm the U.S. industry and U.S. workers.

Global Affairs Canada. March 1, 2018. Statement by Canada on steel and aluminum. Statement

Ottawa, Ontario - The Honourable Chrystia Freeland, Minister of Foreign Affairs, today issued the following statement:

“As a key NORAD and NATO ally, and as the number one customer of American steel, Canada would view any trade restrictions on Canadian steel and aluminum as absolutely unacceptable.

“Any restrictions would harm workers, the industry and manufacturers on both sides of the border. The steel and aluminum industry is highly integrated and supports critical North American manufacturing supply chains. The Canadian government will continue to make this point directly with the American administration at all levels.

“Canada is a safe and secure supplier of steel and aluminum for U.S. defence and security.  Canada is recognized in U.S. law as a part of the U.S. National Technology and Industrial Base related to national defence.

“The United States has a $2-billion surplus in steel trade with Canada. Canada buys more American steel than any other country in the world, accounting for 50% of U.S. exports.

“It is entirely inappropriate to view any trade with Canada as a national security threat to the United States.  We will always stand up for Canadian workers and Canadian businesses.  Should restrictions be imposed on Canadian steel and aluminum products, Canada will take responsive measures to defend its trade interests and workers.”

The Globe and Mail. 8 Mar 2018. Canada, Mexico to gain temporary exemption from U.S. tariffs on steel. Trump to backpedal on initial threat, exclude NAFTA partners from levies during renegotiation period
ADRIAN MORROW, OTTAWA
LAWRENCE MARTIN, WASHINGTON
RACHELLE YOUNGLAI, TORONTO

We know from experience that we need to wait and see what this President is actually going to do.

JUSTIN TRUDEAU PRIME MINISTER

Canada and Mexico will be spared temporarily from U.S. President Donald Trump’s tariffs on steel and aluminum while the three countries renegotiate NAFTA, with a permanent exemption if they agree to a deal that satisfies the President, the White House said on Wednesday.

The move allows Mr. Trump to avoid slamming the heavily integrated continental steel and aluminum industries while still using the threat of tariffs to crank up the pressure on his negotiating partners to agree to his protectionist demands at the bargaining table.

It is not entirely clear how the temporary exemption would work, but one possibility would see Canada and Mexico receive a 30-day pass to start, which would be extended only if there is progress in the talks, the Washington

Post reported, citing unnamed U.S. officials.

The President is expected to unveil the details of his promised tariffs of 25 per cent on steel and 10 per cent on aluminum as soon as Thursday.

“The proclamation will have a clause that does not impose these tariffs immediately on Canada and Mexico,” Peter Navarro, a trade adviser to Mr. Trump, told Fox Business Wednesday evening. “It’s going to give us an opportunity … to negotiate a great deal for this country.”

U.S. Trade Representative Robert Lighthizer said at the seventh round of NAFTA talks in Mexico City earlier this week that he wants a deal in the next four to six weeks.

Despite the apparent reprieve, Ottawa is leaving nothing to chance, preparing a plan to hit the United States with retaliatory duties on strategic products just in case it doesn’t get an exemption for the looming global trade war. Mr. Trump’s press secretary, Sarah Huckabee Sanders, told a White House press briefing Wednesday afternoon that other U.S. allies may also receive exemptions.

“There are potential carve-outs for Mexico and Canada based on national security, and possibly other countries as well,” she said.

Mr. Trump surprised aides and industry alike last week when he announced the tariffs, citing the need to protect the U.S. steel and aluminum industries for “national security” reasons.

For days, Canadian officials could not get a clear answer from the White House on whether the levies would apply to Canada. Earlier this week, Mr. Trump upped the ante further by threatening to include Canada and Mexico in the tariffs until they agreed to a renegotiated NAFTA.

Canada’s retaliation for the tariffs would target swing states, said one senior official with knowledge of Ottawa’s planning. Squeezing states such as Florida and Ohio that decide U.S. presidential elections would put pressure on Mr. Trump by hurting the places he must hold to win a second term.

Other people with knowledge of Canada’s thinking said the government is reviewing a list of products it planned to target in a trade dispute over the labelling of meat in 2015, from wine to mattresses to pork.

Prime Minister Justin Trudeau said on Wednesday that, in a telephone call with Mr. Trump two days earlier, he told the President applying the tariffs to Canada “would be entirely unacceptable.” He said he would not unveil Canada’s retaliation until Mr. Trump laid out his cards.

“We know from experience that we need to wait and see what this President is actually going to do,” he told reporters in Toronto.

Mark Warner, an international trade lawyer in Ontario and New York, said he expects the Trudeau government to hit back hard if Canada is not exempted, with retaliatory trade action and possibly lawsuits at the World Trade Organization and NAFTA tribunals.

But Mr. Warner said Ottawa will have a hard time finding the right way to retaliate. Targeting U.S. steel and aluminum would hurt the Canadian economy, and going after specific products in key congressional districts would have little effect: The Republican majority in the U.S. Congress is already on Canada’s side.

“It’s really hard for them to retaliate without hurting the economy,” he said. “They will be looking for something that isn’t going to result in a real cost to Canadians, but is going to hurt the U.S.”

Mr. Warner pointed to former B.C. premier Christy

Clark’s plan last year to tax

U.S. thermal coal passing through her province’s ports as the sort of narrowly targeted measure Canada would probably adopt.

The head of Canada’s largest private-sector union said a harsh response is the only way to get Mr. Trump to relent.

“They perceive us as weak and soft,” Unifor president Jerry Dias told reporters in Ottawa after a meeting with officials in the Prime Minister’s Office, including principal secretary Gerald Butts. “It’s like the schoolyard bully who will push you around every day until you fight back.” Mr. Dias described the PMO officials as anxious. “They are apprehensive, I think is fair to say. It’s difficult to bargain an agreement when you have Donald Trump as the President. Every round, another grenade is thrown,” Mr. Dias said. “Since we started [renegotiating NAFTA] in August of 2017, they have come after softwood lumber, paper, aerospace, steel, aluminum. So that is who we are dealing with.”

Working in Canada’s favour are the forces of free trade in the United States. Defence Secretary Jim Mattis, House of Representatives Speaker Paul Ryan and a host of business leaders have all called on the President to drop or scale back the tariffs.

But Mr. Trump also faces pressure from his nationalistic base to hold the line.

Dan DiMicco, a former steel executive and trade adviser to Mr. Trump, said on Wednesday that exempting Canada would provide a back door into the United States for Chinese steel products. This would defeat the purpose of the levies, which are largely aimed at Beijing.

“There are numerous parts that are made in China that get circumvented through Canada, as well as other products in the energy space,” Mr. DiMicco told reporters during a conference call set up by Alliance for American Manufacturing, a pro-tariff group established by the United Steelworkers union and some industry players.

Rather than exempting entire countries, the administration should exempt only specific products that are not made in the United States but are necessary for the manufacturing sector, Mr. DiMicco said.

USW president Leo Gerard favours a Canadian exemption, but said Ottawa should work with the United States to block cheap overseas steel. “When Canada gets exempted, Canada needs to take a very, very strong position against circumvention and transformation to protect jobs of our members in both countries,” he said.

REUTERS. MARCH 8, 2018. Trudeau confident about Canada's position over U.S. tariff threat

TORONTO (Reuters) - Canadian Prime Minister Justin Trudeau said on Thursday there was a “level of confidence” that the country’s close relationship with the United States would protect it from U.S. tariffs on steel and aluminum imports.

A White House official said on Wednesday that U.S. President Donald Trump planned to offer Canada and Mexico a 30-day exemption from proposed tariffs on steel and aluminum imports, which could be extended based on progress in talks to renegotiate the North American Free Trade Agreement.

Trudeau told CBC radio he believed there would be “a recognition that Canada is in a particular situation in our close relationship” with the United States.

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

Trudeau spoke separately by phone on Thursday with U.S. Senate Majority Leader Mitch McConnell and House of Representatives Speaker Paul Ryan, prominent Republican critics of the tariffs proposal.

“The Prime Minister and Speaker Ryan emphasized the complementary and integrated nature of steel and aluminum industries on both sides of the border,” Trudeau’s office said in a statement. Trudeau called Trump on Monday to stress his concerns about the tariffs, officials said.

Trump planned to have a meeting Thursday to discuss tariffs. He had been expected later in the day to sign a proclamation imposing 25 percent tariffs on steel imports and 10 percent on aluminum, but this could slide into Friday.

“The president has said look, if we get to a position where we have successfully renegotiated NAFTA there won’t be any tariffs for Canada. We are going see what he actually announces later today,” Trudeau said in a separate interview on Breakfast Television.

“We are continuing to push on getting the right deal for Canada, getting the right deal for Canadians, getting the right deal for everyone.”

Reporting by Allison Lampert in Ottawa and David Ljunggren in Ottawa; Editing by Frances Kerry and Tom Brown

REUTERS. MARCH 8, 2018. Canada minister says U.S. tariffs, quotas unacceptable

SANTIAGO (Reuters) - Canada´s trade minister reiterated on Thursday the country´s stance that it will accept no duties or quotas from the United States, speaking just hours before U.S. President Donald Trump was slated to slap new tariffs on steel and aluminum imports.

“We are monitoring the situation. There is a very fluid situation. We were clear that any tariffs or quotas will be unacceptable for Canada,” Trade Minister Francois-Phillippe Champagne told Reuters on the sidelines of the signing ceremony for an Asia-Pacific trade agreement in Santiago

Reporting by Dave Sherwood; Editing by Cynthia Osterman

REUTERS. MARCH 8, 2018. Trump says he'll stick to tariff levels; Mexico, Canada reject pressure
Jeff Mason, Antonio De la Jara, Dave Sherwood

WASHINGTON/SANTIAGO (Reuters) - President Donald Trump was set to press ahead with the imposition of 25 percent tariffs on steel imports and 10 percent on aluminum, although he said on Thursday he was willing to strike a deal that could exempt Canada and Mexico.

Trump has 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 the North American Free Trade Agreement (NAFTA), which appear to be stalled.

Mexico rejected the linkage to NAFTA in robust terms on Thursday. Mexican Economy Minister Ildefonso Guajardo told Reuters, “Under no circumstance will we be subject to any type of pressure.” Canadian Trade Minister Francois-Phillippe Champagne told Reuters his country would not accept any duties or quotas from the United States.

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 a campaign by legislators from his own Republican party, industry groups and America’s allies abroad.

“I’m sticking with 10 and 25 (percent) initially. I’ll have a right to go up or down, depending on the country, and I’ll have a right to drop out countries or add countries,” the president told reporters at the beginning of a Cabinet meeting at the White House.

Trump was due to announce the duties at 3.30 p.m. ET (2030 GMT), although the range of potential exemptions for allies and for industries has made the final outcome unpredictable.

U.S. stock markets were roughly flat on Thursday as investors were nervous of making bets ahead of the announcement.

The president said he was pleased with progress in the NAFTA talks, although he repeated that he would be willing to terminate the agreement. The talks were launched after Trump took office last year saying that if the pact was not negotiated to better serve American interests, Washington would leave.

Many observers take a dimmer view of six-month-old talks, saying little progress has been made and the negotiations are stalled over issues such as autos. Car manufacturing’s contribution to the U.S., Mexican and Canadian economies far outweighs that of steel and aluminium production.

In addition to possible exemptions to the steel and aluminum tariffs, there could be a consultation period that would lead to intense lobbying by industry and a growing group of disgruntled Republican lawmakers.

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

“If Donald Trump puts in place the measures this evening, we have a whole arsenal at our disposal with which to respond,” European Financial Affairs Commissioner Pierre Moscovici said.

Countermeasures would include European tariffs on U.S. oranges, tobacco and bourbon, he said. Harley Davidson Inc motorcycles have also been mentioned, targeting House of Representatives Speaker Paul Ryan’s home state of Wisconsin.

ASIA-PACIFIC PACT

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.

Both Guajardo and Champagne were speaking to Reuters on the sidelines of the signing ceremony in Santiago.

Trump, who won the White House after a career in real estate and reality TV, has long touted an 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.

Beijing, which until now had kept largely silent on the issue, sharpened its rhetoric significantly. One lever that China has is U.S. agricultural exports and it has said in the past that it could target soybeans.

“Especially given today’s globalization, choosing a trade war is a mistaken prescription. The outcome will only be harmful,” Foreign Minister Wang Yi said on the sidelines of an annual meeting of China’s parliament. “China would have to make a justified and necessary response.”

China had a record $375.2 billion goods surplus with the United States last year.

Trade tensions between the world’s two largest economies have risen since Trump took office, and although China accounts for only a small fraction of U.S. steel imports, its massive industrial expansion has helped create a global glut of steel that has driven down prices.

The White House has said there could be a 30-day tariff exemption for Mexico and Canada - and some other countries - based on national security. A White House official linked any extension of the exemption to progress in the NAFTA talks..

Most economists and trade specialists say they doubt the steel and aluminum tariffs alone would trigger a global trade war, but point to the risk of further U.S. measures against China as a major tipping point. Trump has also threatened to impose hefty tariffs on European car exports if the EU does take retaliatory measures.

Additional reporting by Michael Martina, Elias Glenn, Kim Coghill, Brian Love, Nichola Saminather, Doina Chiacu and Andrea Hopkins; Writing by David Stamp and David Chance; Editing by Jonathan Oatis and Frances Kerry

REUTERS. MARCH 8, 2018. TSX recovers as Trump promise of flexibility eases tariff fears
Nichola Saminather

TORONTO (Reuters) - Canada’s main stock index advanced on Thursday, with all sectors but one in positive territory, on receding fears of a trade war with the United States after President Donald Trump promised flexibility in dealing with the country’s “real friends.”

A White House official said on Wednesday night that Trump planned to offer Canada and Mexico - fellow signatories of the North American Free Trade Agreement (NAFTA) - the possibility of a 30-day exemption from the tariffs.

In a tweet on Thursday, Trump said he would show “great flexibility and cooperation toward those that are real friends and treat us fairly on both trade and the military.”

The Toronto Stock Exchange’s S&P/TSX composite index opened up 39.52 points, or 0.26 percent, at 15,511.08. It was trading 0.4 percent higher at 15,535.71 at 9:58 am (1458 GMT).

Shares of trade-sensitive auto parts and railroad companies recovered. Magna International Inc advanced 0.5 percent to C$67.96 and Canadian National Railway Co was up 0.3 percent at C$94.35.

Machine manufacturer Linamar Corp and Packing tape-maker Intertape Polymar Group were the biggest gainers on the index, rising 7.6 and 7.2 respectively, after reporting fourth-quarter profits that beat expectations.

The healthcare group was the sector with the most gains, rising 1.4 percent.

Cominar REIT (CUF_u.TO) was the biggest decliner on the index, falling 5.5 percent after reporting a drop in its quarterly operating revenue.

Mining companies Ivanhoe Mines, Franco-Nevada Corp and Paramount Resources were also among the biggest decliners, hit by a retreat in metal prices.

Cominar REIT
12.98
CUF_U.TOTORONTO STOCK EXCHANGE
-0.78(-5.67%)
CUF_u.TO

CUF_u.TO

Copper futures pulled back 1.6 percent to $6,836.50 a tonne, while gold futures slipped 0.2 percent to $1,324.2 an ounce.

The TSX materials group, which includes precious and base metals miners and fertilizer companies, lost 0.5 percent.

U.S. crude oil futures fell 0.75 percent to $60.69 a barrel.

Cominar was the most actively traded stock on the index, followed by marijuana producers Canopy Growth and Aphria Inc.

There were 168 advancing issues and 73 declining ones. Nine were flat.

Reporting by Nichola Saminather; Editing by Frances Kerry

REUTERS. MARCH 7, 2018. Trump plans to offer Canada, Mexico 30-day tariff exemption: official
Steve Holland

WASHINGTON (Reuters) - U.S. President Donald Trump plans to offer Canada and Mexico a 30-day exemption from planned tariffs on steel and aluminum imports, which could be extended based on progress in NAFTA talks, a White House official said on Wednesday night.The move, first reported by the Washington Post, followed comments earlier in the day by a White House spokeswoman that the impending tariffs could exclude Canada, Mexico and a clutch of other countries “based on national security.”

Trump was expected to sign a presidential proclamation to establish the tariffs during a ceremony on Thursday, but a White House official said later it could slide into Friday because documents had to be cleared through a legal process.

The president has faced mounting opposition to the tariffs from prominent congressional Republicans and business officials worried about their potential impact on the economy.

The tariffs would impose duties of 25 percent on steel and 10 percent on aluminum to counter cheap imports, especially from China, that the president says undermine U.S. industry and jobs.

A senior U.S. official said the measures would take effect about two weeks after Trump signs the proclamation.

White House spokeswoman Sarah Sanders told a regular media briefing on Wednesday: “We expect that the president will sign something by the end of the week and there are potential carve-outs for Mexico and Canada based on national security, and possibly other countries as well based on that process.

“It will be country by country, and it will be based on national security,” she said.

Trump had said on Monday that Canada and Mexico would only be excluded after the successful renegotiation of the North American Free Trade Agreement.

Efforts by Trump and U.S. trade negotiators to link the NAFTA talks to the duties have received short shrift from Ottawa and Mexico City.

Action that does not include exemptions risks retaliatory tariffs on U.S. exports - not least by Canada and Europe - and complicates already tough trade talks on NAFTA.

The benchmark Standard & Poor’s 500 stock index ended slightly lower following a volatile session after Trump promised the tariffs but then said Mexico and Canada could be exempt.

The S&P closed 0.05 percent lower after being down 0.4 percent, while the Dow Jones Industrial Average ended down 0.33 percent. The U.S. dollar pared gains to end little changed, while the Canadian dollar and Mexican peso pared some losses.

Markets were rattled by Tuesday’s resignation announcement by Trump’s chief economic adviser, Gary Cohn, who was seen as a bulwark against Trump’s economic nationalism.

Cohn’s departure, after an internal White House battle over Trump’s plans to impose the tariffs, clears the way for greater influence by trade hardliners such as Commerce Secretary Wilbur Ross and Peter Navarro, Trump’s trade policy adviser.

Sanders said Trump was considering several candidates to fill Cohn’s position, while Navarro said he was not short-listed for the job.

CHINA

In his first tweet on Wednesday, the Republican president showed no sign of backing away from the tariffs, saying the United States had lost more than 55,000 factories and 6 million manufacturing jobs and let its trade deficit soar since the 1989-1993 administration of President George H.W. Bush.

Later, his tweets turned to trade with China, demanding that Beijing lay out plans for reducing its trade surplus with the United States by $1 billion, which appeared to have been raised during a meeting with a top Chinese official last week.

“China has been asked to develop a plan for the year of a One Billion Dollar reduction in their massive Trade Deficit with the United States,” Trump tweeted, without saying where the message had been conveyed.

China ran a record goods trade surplus with the United States last year of $375.2 billion

On Wednesday, more than 100 House of Representative Republicans, including Kevin Brady, chairman of the House Ways and Means Committee that oversees U.S. trade policy, wrote to Trump praising him for standing up to “bad actors,” but emphasized that fairly traded products should be excluded from the tariffs.

In a separate letter, Iowa’s congressional delegation, including two Republican senators, warned that the tariffs would hurt the state’s farmers and manufacturing.

The head of the influential U.S. Chamber of Commerce, Tom Donohue, warned about the impact to the economy.

“We won’t drive the economy to over 3 percent growth or continue to create jobs if we go down this path,” said Donohue, the chamber’s president and chief executive. “We urge the administration to take this risk seriously.”

Additional reporting by Roberta Rampton, David Shepardson, Susan Heavey, Makini Brice and Jason Lange in Washington, Tom Miles in Geneva and Phil Blenkinsop in Luxembourg; Writing by Robin Pomeroy and Lesley Wroughton; Editing by James Dalgleish and Peter Cooney

BLOOMBERG. 8 March 2018. Trump Signs Tariff Order on Metals With Wiggle Room for Allies
By Andrew Mayeda and Jennifer Epstein

• U.S. to impose 25% tariff on steel and 10% on aluminum
• Mexico and Canada to be excluded; door open to other nations

President Donald Trump followed through on his pledge to impose stiff tariffs on imported steel and aluminum, while excluding Canada and Mexico and leaving the door open to sparing other countries on the basis of national security.

The president signed a proclamation authorizing the tariffs at a meeting Thursday afternoon with workers from the steel and aluminum industries. The U.S. will levy a 25 percent duty on steel and 10 percent on aluminum, the same level Trump promised when he revealed the plan March 1, according to a senior administration official who briefed reporters before the signing. The tariffs will take effect in 15 days, the official said.

“Today I’m defending America’s national security by placing tariffs on foreign imports of steel and aluminum,” Trump said, flanked by workers from the industries and economic advisers who had backed the plan.

The president said U.S. political leaders preceding him had allowed the decline of manufacturing in the nation, and cited a protectionist predecessor, President William McKinley, in defense of the tariffs. “Our factories were left to rot and to rust all over the place,” Trump said.

Gary Cohn, the National Economic Council director who announced his resignation on Tuesday after failing to persuade Trump against the tariffs, stood in the back of the room.

Exempting some nations marks a compromise from Trump’s initial plan for across-the-board tariffs, which was harshly criticized by members of his own Republican party who said it would cost U.S. jobs, raise consumer prices and hit American manufacturers. Trading partners including the European Union threatened retaliation, triggering fears of a trade war. International Monetary Fund Managing Director Christine Lagarde said no one wins in a trade battle and warned the proposed tariffs could have a serious negative economic impact.

Message Received

The message appeared to get through. Trump agreed to exclude Canada and Mexico from the duties because of their status as key regional allies and partners with the U.S. in renegotiating a new North American Free Trade Agreement, said the official, who spoke on condition of anonymity. Any U.S. trade partner has the option of asking to be excluded from the tariffs, the official said, and allies could be excluded if they can demonstrate how the tariffs would damage their national security.

U.S. aluminum and steel stocks, which had declined earlier Thursday, continued to trade lower as Trump prepared to comment on his administration’s import tariffs plan.

U.S. Steel Corp. was down 2.8 percent at 3:30 p.m. in New York, after earlier falling as much as 4.6 percent, while Nucor Corp., the largest American producer, dropped 2.9 percent. Alcoa Corp., the biggest U.S. aluminum producer, was down 1 percent after declining as much as 2.8 percent, while Century Aluminum Co. was down 7.1 percent.

The prospect of further exclusions should trigger a push by U.S. allies in Europe, Australia and elsewhere to lobby for similar treatment to Canada and Mexico.

The tariff threat has escalated tensions from Beijing to Brussels. On Thursday, China’s foreign minister, Wang Yi, vowed a “justified and necessary response” to any efforts to incite a trade war. It was the Chinese government’s most forceful response yet to the new tariffs.

Wang, who spoke on the sidelines of the National People’s Congress in Beijing, urged the U.S. to work with China on a mutually beneficial solution.

“A trade war has never been the right way to solve the problem, especially under globalization,” Wang said. Such a conflict “will only harm everyone and China will surely make a justified and necessary response.”

Steel Supplier

Canada, the biggest supplier of steel and aluminum to the U.S., and No. 4 steel-provider Mexico had asked to be exempted, and indicated they would have retaliated if Trump included them in the duties.

Negotiators from the U.S., Canada and Mexico wrapped up the seventh round of Nafta talks this week in Mexico still hoping for a breakthrough on the biggest sticking points. No date has been announced yet for the next round of negotiations and it’s almost certain the parties won’t meet their goal to reach a deal by the end of March.

“If we don’t make the deal on NAFTA,” Trump said, “then we’re going to terminate NAFTA and we’re going to start all over again, or we’ll just do it another way.”

But if a deal is made, he said “there won’t be any tariffs on Canada, and there won’t be any tariffs on Mexico.”

The EU has warned it would respond with its own 25 percent tariff on about $3.5 billion of American goods. The bloc is targeting iconic U.S. brands produced in key Republican states on a range of consumer, agricultural and steel products, according to a list drawn up by the European Commission.

Trump’s authority to establish the tariffs stems from a Commerce Department investigation that found that imports of the metals pose a risk to national security. The probes were authorized under the seldom-used Section 232 of the 1962 Trade Expansion Act, which gives the president broad powers to impose trade restrictions on domestic security grounds.

BLOOMBERG. 8 March 2018. Trump Says U.S. to Be Very Flexible on Tariffs He’ll Sign Today. Trump Says U.S. Will Be 'Flexible" When It Comes to Tariffs
By Justin Sink

• Canada, Mexico expected to be exempted, others may get relief
• Steel tariff announcement expected 3:30 p.m. in Washington

President Donald Trump will sign an order on Thursday over steel and aluminum tariffs that he said could spare Canada, Mexico, possibly Australia and certain other countries that have strong trading and military ties with the U.S.

Trump will sign the formal proclamations on the tariffs at 3:30 p.m. in Washington, the White House said in an emailed statement. After that, he has as many as 15 days to implement the tariffs.

Trump told reporters earlier Thursday during a Cabinet session that Mexico and Canada would likely not face the levies if they renegotiate the North American Free Trade Agreement. The president also noted that the U.S. has a trade surplus with Australia and called the nation a “long-term partner.”

“We have other countries that are very much involved with us on trade but also on military,” Trump said. “We’ll be making a decision as to who they are.”

Trump added that he’s “sticking with 10 and 25 initially,” referring to the 10 percent tariff on aluminum imports and 25 percent on steel that he has said he’ll impose. “I’ll have a right to go up or go down depending on the country, and I’ll have a right to drop out countries or add countries,” Trump said.

Trump told reporters they will hear what he is doing at the afternoon meeting and that the administration is “going to be very fair, we’re going to be very flexible” but will protect American workers.

BLOOMBERG. 8 March 2018. Trump Bats Away Threats of Tariff Retaliation. Trump Says U.S. Will Be 'Flexible" When It Comes to Tariffs
By Andrew Mayeda and Jennifer Jacobs

• Mexico and Canada would be exempt if Nafta talks succeed
• Beijing will fight a trade war, Chinese foreign minister warns

President Donald Trump said he’s “looking forward” to meeting at the White House Thursday afternoon on his call to impose sweeping tariffs on imported steel and aluminum despite threats of retaliation from trading partners and calls by some Republicans for reconsideration.

“Looking forward to 3:30 P.M. meeting today at the White House,” Trump said on Twitter Thursday morning. “We have to protect & build our Steel and Aluminum Industries while at the same time showing great flexibility and cooperation toward those that are real friends and treat us fairly on both trade and the military.”

It was unclear if Trump expects to sign the order to establish the tariffs at the meeting, which wasn’t listed on the official White House schedule. While it was earlier reported that the order was to be signed Thursday, a person familiar with the planning said it would likely be pushed back to allow more time to prepare the legal documents.

The decision-making process regarding the tariffs has evolved and more changes could be made before the president formally approves them.

A White House spokesman didn’t immediately return an email seeking comment after Trump’s tweet Thursday.

Trump has said he could exempt some nations from the new tariffs, amid threats of retaliation from U.S. trading partners and warnings from his own party that the move will hurt American businesses and consumers.

The administration will initially exclude Canada and Mexico from the tariffs, an exemption they would lose if they can’t agree to an updated North American Free Trade Agreement with the U.S., White House trade adviser Peter Navarro said on Wednesday. Other American allies could use a similar system to ask for an exemption, he said.

If Nafta talks fail, Canada and Mexico would face the same tariffs as other nations, Navarro added.

Other nations have threatened reprisals, and tensions are escalating. On Thursday, China’s foreign minister, Wang Yi, vowed a “justified and necessary response” to any efforts to incite a trade war. It was the Chinese government’s most forcible response yet to the new tariffs.

Wang, who spoke on the sidelines of the National People’s Congress in Beijing, urged the U.S. to work with China on a mutually beneficial solution.

“A trade war has never been the right way to solve the problem, especially under globalization,” Wang said. Such a conflict “will only harm everyone and China will surely make a justified and necessary response.”

Exemption or Retaliation

Canada, the biggest supplier of steel and aluminum to the U.S., and No. 4 steel-provider Mexico have asked to be exempted, and both have indicated they’ll retaliate if Trump includes them in the duties.

The U.S. may exempt countries from the duties based on national security considerations, White House Press Secretary Sarah Huckabee Sanders said Wednesday. She didn’t comment on how those determinations would be made and or which countries would qualify.

“There are potential carve-outs for Canada and Mexico based on national security and possibly other countries as well,” Sanders told reporters at the White House. “That would be a case-by-case and country-by-country basis.”

Negotiators from the U.S., Canada and Mexico wrapped up the seventh round of Nafta talks this week in Mexico still hoping for a breakthrough on the biggest sticking points. The president hinted at the tariff incentive in a tweet earlier this week, without elaborating on how the trade-off would work.

Trump has said he’s determined to impose a 25 percent tariff on steel imports and 10 percent on aluminum to protect national security. The plan has been widely criticized by Republicans, panned by corporate America, shaken global financial markets, and prompted the resignation of Trump’s top economic adviser, Gary Cohn, this week.

Intensifying Concern

More than 100 House Republicans, led by Ways and Means Committee Chairman Kevin Brady, urged Trump on Wednesday to reconsider broad tariffs, warning that they would cost American jobs, raise prices for consumers and hurt domestic manufacturing.

Adding to the wave of criticism, the head of the U.S. Chamber of Commerce Thomas Donohue said his organization was very concerned about the potential for retaliation and a trade war.

The European Union has warned it would respond with its own 25 percent tariff to hit $3.5 billion of American goods. The bloc is targeting iconic U.S. brands produced in key Republican states on a range of consumer, agricultural and steel products, according to a list drawn up by the European Commission.

Trump announced the planned tariffs on March 1, after a Commerce Department investigation found that imports of the metals pose a risk to national security. The probes were authorized under the seldom-used Section 232 of the 1962 Trade Expansion Act, that gives the president broad powers to impose trade restrictions on domestic security grounds.

Under the Section 232 rules, Trump has until April 11 to make a decision on steel and April 19 on aluminum.

— With assistance by Terrence Dopp

NAFTA

REUTERS. MARCH 8, 2018. Exclusive: Mexico says U.S. tariffs will not pressure NAFTA talks
Antonio De la Jara

SANTIAGO (Reuters) - Mexico’s Economy Minister Ildefonso Guajardo said on Thursday he would not allow the United States to use planned tariffs on steel and aluminum imports to pressure the country in ongoing NAFTA talks.

U.S. President Donald Trump plans to offer Canada and Mexico a 30-day exemption from the planned tariffs, which could be extended based on progress in NAFTA talks, a White House official said on Wednesday night. [nL5N1QP3ZG]

“This has nothing to do with the [NAFTA] negotiations,” Guajardo told Reuters on the sidelines of the signing ceremony for an Asia-Pacific trade agreement in Santiago. “Under no circumstance will we be subject to any type of pressure.”

Guajardo said Mexico was willing to spend “as much time as necessary” to resolve NAFTA negotiations successfully.

“Mexico will not be leaving the treaty,” Guajardo said. “NAFTA exists between three countries. The others are deciding whether they stay or leave, not Mexico.”

Reporting by Antonio de la Jara; Writing by Luc Cohen; Editing by Susan Thomas and David Gregorio

CPTPP

Global Affairs Canada. March 8, 2018. Statement by Minister Champagne on signing of Comprehensive and Progressive Agreement for Trans-Pacific Partnership

Santiago, Chile - The Honourable François-Philippe Champagne, Minister of International Trade, today issued the following statement following the signature of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP):

“In Santiago today I was honoured to represent Canada at the historic signing of the CPTPP agreement with all 11 member countries. Canada is very proud to be part of this achievement. Canadian workers, producers, farmers, entrepreneurs and businesses of all sizes will benefit from the CPTPP, which will diversify our export‎ markets, strengthen our ties with the Asia-Pacific region and create good jobs at home.

“Canada successfully improved the terms of this deal in the best interests of Canadians. This includes achieving important outcomes on intellectual property, an investor-state dispute settlement mechanism and other provisions of concern to Canadian stakeholders. For the first time, the environment and labour chapters are also enforceable under the agreement's FTA dispute settlement ‎mechanism. In addition, Canada secured side letters on motor vehicles and culture that carry the full force of international law.

"The Government of Canada is committed to negotiating trade deals that benefit Canadians and help grow the middle class. The CPTPP will expand Canada’s market access and allow Canadian businesses to seize key opportunities in a burgeoning region.”

Quick facts

• The CPTPP will be one of the largest trading blocs in the world, with 11 member countries. CPTPP countries represent 495 million people and have a combined GDP of $13.5 trillion.
• In 2016, Canada’s merchandise trade with the 10 other CPTPP countries amounted to $105 billion.
• The 11 member countries of the CPTPP are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

EDC. MARCH 8, 2018. WEEKLY COMMENTARY. CPTPP: Trade is Still in Vogue!
By Peter G Hall, Vice President and Chief Economist

A good night’s sleep doesn’t come easily for Canadian exporters these days. Export sales aren’t the issue; they are booming, thanks to the red-hot US economy. The big worry is that it’ll all come to a grinding halt. The threat of protectionism has zoomed up their insomnia list; they are keenly concerned about radical changes to the international trade superstructure, and how to prepare themselves. Are their fears founded?

Great question. Global support for the anti-trade movement intensified in the suddenness of the Great Recession, and the inability of the world economy to rack up respectable growth for the past seven years. Millions were unable to find meaningful work, or any work at all, sparkling a negative reaction toward government, corporations, post-war institutions and the ‘1-per-cent’. It’s a delicate dance: just as frustration is fomenting, the disaffected are returning to the job market in droves. Activism could lead to an undermining of the very architecture that at long last is serving up the very thing activists have been asking for.

Thankfully, to date anti-trade political bombast is just that. Last year’s volley of European elections all tilted toward traditional structures. The US keeps threatening to back away from trade agreements, most notably NAFTA, but in this case, it keeps coming back to the table with a modernization message.

Why is the CPTPP important to Canada? 

Amid the mayhem, deals are still being done. Canada has inked CETA with Europe, and indications are that the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) might indeed be signed this week. This new deal is exciting for a number of key reasons. First, it is dealing with intellectual property considerations in new ways. Next, it crafts new rules for trade in services, a burgeoning segment of the international trade space. Third, it is bringing together nations with very exciting growth stories and potential to continue that path for years to come. Fourth, the deal could have fizzled in the wake of American withdrawal, but it hasn’t. For Canada, it’s our first free-trade foray into Asia, aside from the deal with Korea. And it further expands – by over 13 per cent – the significant share of world GDP that Canada has access to through trade agreements.

Top Trade with Canada and CPTPP countries 

What’s in it for Canada? About $100 billion in goods and services flowed between Canada and CPTPP countries in 2017 – enough that collectively, they are Canada’s third-largest trading partner. Net of Japan, merchandise exports to this bloc has grown by 6.6 per cent annually since 2000, over four times Canada’s average. More recently, it’s consistently double the overall growth of goods exports. Add to that the more sizable investment relationship with CPTPP countries - $122 billion in 2016 – and the picture of potential gets even better.

Lowering tariff barriers with the CPTPP countries yields considerable benefits. Economists at Global Affairs Canada estimate that a trade agreement will ultimately lift Canadian GDP by $4.2 billion, and exports by $2.7 billion. The bulk of the gains arise from tariff reductions, which are larger for other nations than for Canada. Interestingly, both the GDP and export gains are larger under CPTPP than under the original TPP agreement.

Not all sectors will benefit equally. Those with the larger gains include meat exports, with a net increase of greater than $1 billion. Exports of services see the next-highest impact, while the auto and wood products sectors are next. In the case of autos, there is concern about non-tariff barriers and cultural factors that may limit the ability to penetrate certain markets.

Given the general shift to a more anti-trade stance, it was a pleasant surprise to see revived interest in the CPTPP deal. It is giving liberalized trade and the process of globalization a very needed and timely shot in the arm. Hopefully it is timely enough to stave off the popular but misguided notion that gains from trade are an economic theorist’s illusion, one that has in general failed a vast chunk of the population. Thankfully, the economic cycle has stepped up to lend its support – the benefits are mounting, and are consistently grabbing the headlines.

The bottom line?

Sleep-stealing anti-trade politics isn’t likely to cease anytime soon. As long as it has mass appeal, it’ll be used as vote-getting rhetoric. So far, the ‘gains from trade’ logic is winning out. Inking the CPTPP deal will give the movement needed momentum – and for exporters, an angst antidote.

REUTERS. MARCH 8, 2018. Asia-Pacific nations sign sweeping trade deal without U.S.
Dave Sherwood, Felipe Iturrieta

SANTIAGO (Reuters) - Eleven countries including Japan and Canada signed a landmark Asia-Pacific trade agreement without the United States on Thursday in what one minister called a powerful signal against protectionism and trade wars.

In Washington, U.S. President Donald Trump vowed to press ahead with a plan to impose tariffs on steel and aluminum imports, a move that other nations and the International Monetary Fund said could start a global trade war.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will reduce tariffs in countries that together amount to more than 13 percent of the global economy - a total of $10 trillion in gross domestic product. With the United States, it would have represented 40 percent.

Heraldo Munoz, Chile’s minister of foreign affairs, said the agreement was a strong signal “against protectionist pressures, in favor of a world open to trade, without unilateral sanctions and without the threat of trade wars.”

“We will be giving a very powerful signal,” he said at a news conference after giving a joint statement with trade ministers from Canada and New Zealand.

Even without the United States, the deal will span a market of nearly 500 million people, making it one of the world’s largest trade agreements, according to Chilean and Canadian trade statistics.

The original 12-member agreement, known as the Trans-Pacific Partnership (TPP), was thrown into limbo early last year when Trump withdrew from the deal three days after his inauguration. He said the move was aimed at protecting U.S. jobs.

‘THE WAY FORWARD’

The 11 remaining nations finalized a revised trade pact in January. That agreement will become effective when at least six member nations have completed domestic procedures to ratify it.

The revised agreement eliminates some requirements of the original TPP demanded by U.S. negotiators, including rules to ramp up intellectual property protection of pharmaceuticals. Governments and activists of other member nations worry the changes will raise the costs of medicine.

The final version of the agreement was released in New Zealand on Feb. 21. The member countries are Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

“We’re proud ... to show the world that progressive trade is the way forward, that fair, balanced, and principled trade is the way forward, and that putting citizens first is the way forward for the world when it comes to trade,” Canadian Trade Minister Francois-Phillippe Champagne said.

In January, Trump, who also has threatened to pull the United States out of the North American Free Trade Agreement, told the World Economic Forum in Switzerland that it was possible Washington might return to the TPP pact if it got a better deal. However, New Zealand’s trade minister said that was unlikely in the near term, while Japan has said altering the agreement now would be very difficult.

On Thursday, Trump vowed to impose a 25 percent tariff on steel imports and 10 percent tariff on aluminum imports, although he said he was willing to strike a deal that could exempt NAFTA partners Mexico and Canada.

Trump announced the planned tariffs last week, rattling financial markets.

Mexico’s Economy Minister Ildefonso Guajardo, in Santiago for the TPP signing, told Reuters he would not allow the United States to use the tariffs to pressure it in ongoing NAFTA talks. Champagne told Reuters that Canada would not accept duties or quotas from the United States.

Reporting by Dave Sherwood; Writing by Dave Sherwood and Caroline Stauffer; Editing by Bill Trott and Paul Simao

THE GLOBE AND MAIL. THE CANADIAN PRESS. MARCH 8, 2018. Canada chasing trade deal with South American bloc after signing new TPP
MIKE BLANCHFIELD

OTTAWA - Canada is expected to announce Friday the start of formal free-trade negotiations with the four-country South American trade bloc known as Mercosur.

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

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

Champagne's spokesman Joseph Pickerill 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 continuing to plague the renegotiation 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 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 and Uruguay.

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 and Brazil's Embraer, he added.

"This is going to be a tough negotiation. Brazil is a large market, so is Argentina," said Dade. "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.

ECONOMY

Canadian Economic News. 2018-03-08. February 2018 edition

Note

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

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

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

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

Resources

• Calgary-based Encana Corporation announced its 2018 capital program is expected to be between USD $1.8 billion and $1.9 billion and that approximately 70% of the program will be focused on growing oil production from the Permian and condensate production in the Montney. The company said its capital expenditures in 2017 were USD $1.796 billion.
• Calgary-based Imperial Oil Limited announced its 2018 capital expenditures are expected to range between $1.5 billion to $1.7 billion. The company said its 2017 capital and exploration expenditures totalled $671 million. Imperial also said that planned investment aimed at increasing annual average gross production at Kearl to 240,000 barrels per day is expected to be completed by year-end 2019.
• Calgary-based TransCanada Corporation announced it expects to spend approximately $9.0 billion in 2018 on growth projects, maintenance capital and contributions to equity investments, with the majority of its anticipated capital program focussed on U.S., Canadian and Mexico natural gas pipeline growth projects. The company said its 2017 capital spending was $9.21 billion. TransCanada also announced it will move forward with a $2.4 billion expansion of its NGTL System to connect incremental supply and expand basin export capacity by one billion cubic feet of natural gas per day at the interconnection with its Canadian Mainline. The company said NGTL anticipates filing a project description with the National Energy Board by the second quarter of 2018 to initiate the regulatory review process for the expansion, and that, subject to regulatory approvals, it expects construction to begin in 2019.
• Calgary-based Enbridge Inc. announced its total capital expenditures for 2017 were $8.287 billion. The company had previously announced that its capital expenditures for 2018 would be approximately $9.0 billion.
• Calgary-based Inter Pipeline Ltd. announced its planned 2018 capital expenditure program will be $950 million. The company said its capital expenditures in 2017 were $400.5 million.
• Calgary-based Pembina Pipeline Corporation announced its capital expenditures in 2017 were $1.839 billion. The company had previously announced its capital program for 2018 would be approximately $1.3 billion.
• Vancouver-based Teck Resources Limited announced its capital expenditures in 2018 are expected to be $2.120 billion. The company said its capital expenditures in 2017 were $2.299 billion.
• Calgary-based MEG Energy Corp. announced that it had entered into an agreement with Wolf Midstream Inc., also of Calgary, for the sale of MEG’s 50% interest in Access Pipeline and 100% interest in Stonefell Terminal for $1.61 billion. MEG said the transaction is expected to close in the first quarter of 2018, subject to regulatory approvals and customary closing conditions. MEG also announced it intends to increase its 2018 capital budget from $510 million to $700 million.
• The Government of British Columbia announced it will be moving forward with consultation around four bitumen spill safeguards, as announced in January, while referring to the courts the outstanding issue regarding restrictions on the increase of diluted bitumen transportation.

Finance and insurance

• Toronto-based Choice Properties Real Estate Investment Trust and Canadian Real Estate Investment Trust (CREIT), also of Toronto, announced an agreement pursuant to which Choice Properties will acquire all of CREIT’s assets and assume all of its liabilities in a transaction valued at $6.0 billion. The companies said they anticipate the transaction will be completed in the second quarter of 2018, subject to compliance with the Competition Act, unitholder and court approvals, as well as certain other customary closing conditions.
• Toronto-based Scotiabank and Jarislowsky Fraser of Montreal announced that Scotiabank will acquire Jarislowsky Fraser for approximately $950 million. Scotiabank said the transaction is expected to close in fiscal Q3 2018, subject to regulatory approvals.
• Toronto-based Fairfax Financial Holdings Limited and Carillion Canada Holdings Incorporated of Concord, Ontario, announced they had entered into an agreement pursuant to which Fairfax will acquire certain assets and assume certain liabilities related to Carillion’s Canadian operations. The companies said the transaction is expected to close in the first quarter of 2018, subject to customary closing conditions, including approval by the Ontario Superior Court of Justice in Carillion Canada’s proceedings under the Companies’ Creditors Arrangement Act, regulatory approvals, and the satisfactory completion of due diligence by Fairfax.

Other news

• The Government of Canada tabled Budget 2018 on February 27th, which included new funding to support science and innovation; new investments to improve the quality of life for Indigenous Peoples; and measures to increase the labour force participation of women and address the gender wage gap including a new Employment Insurance Parental Sharing Benefit. The Government forecasts an $18.1 billion deficit for 2018-2019 and real GDP growth of 2.2% in 2018.
• The Government of New Brunswick tabled its 2018-19 provincial budget on January 30th, which includes an additional $73 million in new targeted investments to support economic competitiveness, youth employment and seniors. The Government forecasts a $189 million deficit in 2018-19 and real GDP growth of 1.1% in 2018.
• The Government of the Northwest Territories tabled Budget 2018-19 on February 8th, which includes $21 million in new investments to support the economy, environment and climate change resilience and adaptation; education; community wellness; cost of living support; and governance. The Government forecasts a $23 million operating surplus in 2018-19 and an economic contraction of 0.1% in 2018.
• The Government of British Columbia tabled Budget 2018 on February 20th, which included a new tax on housing speculation, an increase in the foreign home buyers tax from 15% to 20% effective February 21, 2018, and increased spending on child care as well as investments in affordable housing, education and health care. The Government forecasts a $219 million surplus in 2018-19 and real GDP growth of 2.3% in 2018.
• The Government of British Columbia announced it will raise the province’s minimum wage from $11.35 an hour to $12.65 an hour on June 1st. The Government said additional increases will take place on June 1st of each year for three more years and that, by June 2021, the province’s minimum wage will rise to at least $15.20 an hour.
• The Government of New Brunswick announced it will increase the minimum wage from $11.00 per hour to $11.25 per hour on April 1st. The Government also said the minimum wage will be indexed to the corresponding increase in the New Brunswick consumer price index.
• The Government of Newfoundland and Labrador announced it will raise the minimum wage from $11.00 per hour to $11.15 per hour effective April 1st, 2018, and that future increases will take effect April 1st of each year and be based on the percentage change in the National Consumer Price Index.
• The Government of Canada announced proposed changes to environmental laws and regulations related to the review of major natural resource projects. The proposed changes include:

• increasing public participation in project reviews;
• ensuring decisions are based on robust science and Indigenous traditional knowledge;
• replacing the Canadian Environmental Assessment Act, 2012, with the Impact Assessment Act, and extending the types of impacts studied;
• establishing the Impact Assessment Agency of Canada (currently the Canadian Environmental Assessment Agency) to lead all federal reviews of major projects;
• reducing timelines for project reviews compared to the current system; and
• amending the Fisheries Act, including expanding protections under the Canadian Navigable Waters Act.

• The Government of Alberta announced support for full-scale commercialization of partial-upgrading technologies as part of its strategy for energy diversification. The Government said it will support up to $1 billion for full-scale commercialization of partial-upgrading technologies over eight years beginning in 2019-20, which will include a variety of fiscal tools including loan guarantees and grants.
• Illinois-based Motorola Solutions Inc. announced it had entered into a definitive agreement to acquire Avigilon Corporation of Vancouver for an enterprise value of USD $1.0 billion including Avigilon’s net debt. The company said the transaction is expected to be completed by the end of the second quarter of 2018, subject to customary closing conditions, including regulatory, shareholder and court approvals.
• San Francisco-based Salesforce.com, Inc. announced it plans to invest USD $2.0 billion over the next five years to increase its headcount, real estate footprint and data centre capacity in Canada. The company said it currently employs more than 1,300 employees in Canada.
• The U.S. Department of Commerce (DOC) announced the initiation of antidumping duty (AD) and countervailing duty (CVD) investigations of imports of large diameter welded pipe from Canada, China, Greece, India, Korea, and Turkey. The DOC said the estimated dumping margin alleged by the petitioners is 50.89% for Canada. The DOC also said the U.S. International Trade Commission is scheduled to make its preliminary injury determinations on or before March 5, 2018.

United States and other international news

• The Bank of England's Monetary Policy Committee maintained the Bank Rate at 0.50%, and the stock of UK government bond purchases, financed by the issuance of central bank reserves, at £435 billion. The last change in the Bank Rate was a 25 basis-point increase in November 2017.
• The Reserve Bank of Australia maintained the cash rate at 1.50%. The last change in the cash rate was a 25 basis point reduction in August 2016.
• The Reserve Bank of New Zealand left the Official Cash Rate, its main policy rate, unchanged at 1.75%. The last change in the Official Cash Rate was a 25 basis point reduction in November 2016.
• Sweden's Riksbank left its main interest rate, the repo rate, unchanged at -0.5%. The last change in the repo rate was a 15 basis point cut in February 2016.

Financial market news

• Crude oil (West Texas Intermediate) closed at USD $61.64 on February 28th, down from $64.73 at the end of January. The Canadian dollar closed at 78.07 cents U.S. on February 28th, down from 81.35 cents U.S. on January 31st. The S&P/TSX closed at 15,442.68 on February 28th, down from a closing value of 15,951.67 at the end of January.

FULL DOCUMENT: http://www.statcan.gc.ca/eng/dai/btd/cen/feb2018

AVIATION

REUTERS. MARCH 8, 2018. Exclusive: Boeing says Embraer-size deals compatible with cash strategy

CHICAGO (Reuters) - The head of Boeing Co (BA.N) said on Thursday the U.S. planemaker can absorb transactions on the scale of a proposed tie-up with Brazil’s Embraer without putting at risk internal investments in its business or returning cash to shareholders.

Boeing Co
348.28
BA.NNEW YORK STOCK EXCHANGE
+1.24(+0.36%)
BA.N

BA.N

Chairman and Chief Executive Dennis Muilenburg also told Reuters in an interview that Boeing was “making progress” in talks with the Brazilian aerospace company. It continues to study a number of possible structures for a deal, which some outside analysts have said could value Embraer at $5-6 billion.

“Acquisitions of the scale of Embraer are not only very doable for us, they are also things we can selectively do, aligned with our (cash deployment) strategy,” Muilenburg said.

Reporting by Tim Hepher; Editing by Daniel Bases and Jonathan Oatis

The Globe and Mail. REUTERS. 8 Mar 2018. U.S. tariffs would barely lift Boeing prices: analysts
ALWYN SCOTT, NEW YORK

President Donald Trump’s plan to slap tariffs on steel and aluminum imports would barely budge the price of a Boeing Co. jetliner or fighter plane, belying fears of a big blow to U.S. industry, aerospace analysts say.

What could have an impact is retaliation by countries such as China, one of Boeing’s biggest customers, if the United States goes through with threats to tax imported steel by 25 per cent and aluminum by 10 per cent, they said.

As one of the world’s largest manufacturers, Boeing provides a window into how the U.S. President’s tariffs on raw materials would translate into just a fractional uptick in the cost of finished goods. Boeing makes its planes exclusively in the United States, but nearly 70 per cent of the 763 jetliners delivered last year went to customers outside the United States and 22 per cent went to China.

Aluminum makes up 80 per cent of the weight of older model planes such as the 737 and 777 but only about 12 per cent of the cost, according to several experts with direct knowledge of Boeing. The rest is labour, overhead and other expenses.

A 10-per-cent aluminum tariff would increase the cost of a plane by about 1.2 per cent if all of the aluminum is imported. But most of the aluminum Boeing uses is domestically produced, experts said.

“These are big chunks of aluminum that are expensive to transport,” said Eric Redifer, a director in the aerospace practice of industry consulting firm AlixPartners. He and others estimate only 25 per cent to 30 per cent is imported, leaving a net impact of about 0.3 per cent of a plane’s cost.

Prices of domestic aluminum are likely to rise if tariffs are imposed, although it is unclear how much.

On a mid-sized 737, with a list price of US$117.1-million, the cost increase could be less than US$200,000, because airlines often receive discounts of 40 per cent off list price, and Boeing’s profit margin is about 10 per cent. Boeing declined to comment.

The net effect for steel is similar, even though it makes up less of a typical Boeing plane, said Kevin Michaels, aerospace manufacturing expert at AeroDynamic Advisory, a consulting firm in Ann Arbor, Mich.

He estimated Mr. Trump’s 25-per-cent tariff on steel would cost U.S. aerospace companies less than US$100-million, roughly on par with the overall impact on aluminum. That means the two tariffs would add US$150-million to US$200-million in cost, or at most about 0.2 per cent of US$100-billion worth of business jets, jetliners and military aircraft U.S. companies make each year.

For Boeing’s newer 787, which uses carbon-fibre composite, the impact is even less. Aluminum makes up 10 per cent of the cost, Mr. Redifer said. As a result, the President’s aluminum tariff would increase 787 costs about 0.09 per cent.

“What will have a material impact is if China retaliates,” said Richard Aboulafia, aerospace analyst at the Teal Group in Fairfax, Va. “They are openly searching for ways to express their displeasure and apply leverage. And it doesn’t get any more obvious than going from Boeing to Airbus.”

The country’s thirst for jets is so great, however, that it likely will need planes from both Boeing and European rival Airbus to keep up with demand, analysts said.

BUDGET

Department of Finance Canada. March 7, 2018. Minister Morneau Brings Budget 2018 Call to Action on Gender Equality to Calgary

Calgary, Alberta – 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. To face the challenges of today and tomorrow, the Government of Canada will need the hard work and creativity of all Canadians. In return, it needs to ensure the benefits of a growing economy are felt by more and more people—with good, well-paying jobs for the middle class and everyone working hard to join it.

Finance Minister Bill Morneau today spoke to the Calgary Chamber of Commerce during a Facebook Live event held at the Calgary TELUS Convention Centre on how Budget 2018 advances the Government's plan for middle class progress with new investments to promote gender equality and create new opportunities for Canadians.

Through Budget 2018, the federal government is leading by example in promoting gender equality by proposing:

• A legislated "equal-pay-for-equal-work" regime in federally regulated sectors to the benefit of approximately 1.2 million employees.  
• 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 holding employers accountable for wage gaps. 
• To support the advancement of women in senior positions by publicly recognizing corporations that are committed to promoting women to senior leadership positions.
• A new Gender Results Framework to support equal opportunity for all Canadians, backed by new investments to achieve greater 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

"The Government wants to provide Canadians with the opportunity to realize their full potential. This is both the right and the smart thing to do for our economy. When Canadian women and men have equal opportunities to succeed, all Canadians—whether in Calgary or across the country—will have a better chance to enjoy greater prosperity and a better quality of life. 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

Quick Facts

Budget 2018 supports Calgary and the province of Alberta:

• Alberta is expected to receive $99 million for home care and mental health in 2018–19.
• Major federal transfers to Alberta will total $6.2 billion in 2018–19, an increase of $213.4 million from the previous year:

• $4.5 billion through the Canada Health Transfer, an increase of $165.9 million from the previous year; and
• $1.7 billion through the Canada Social Transfer, an increase of $47.6 million from the previous year.

FULL DOCUMENT: https://www.fin.gc.ca/n18/18-015-eng.asp

Innovation, Science and Economic Development Canada. March 8, 2018. Minister Bains to discuss Budget 2018

Ottawa, ON — The Honourable Navdeep Bains, Minister of Innovation, Science and Economic Development, on March 9, 2018, 12:00 p.m. to 1:30 p.m., will be at a lunch hosted by the Brampton Board of Trade to discuss Canada’s 2018 budget.

Employment and Social Development Canada. March 7, 2018. Budget 2018: More help for those who need it with the new Canada Workers Benefit

Halifax, Nova Scotia - The Government of Canada’s plan to build a strong middle class is working. It is creating jobs and economic growth and building confidence. In Budget 2018, the Government is taking the next step to ensure that all Canadians have the opportunity to contribute to, and benefit from, a growing economy. The Government proposes to strengthen programs that make the biggest difference in people’s lives, and is making those programs easier to access.

Today, the Honourable Dominic LeBlanc, Minister of Fisheries, Oceans and the Canadian Coast Guard was in Halifax to highlight Budget 2018 investments and speak to the new Canada Workers Benefit (CWB), a strengthened version of the Working Income Tax Benefit (WITB). The CWB will allow more low-income workers to keep more of their paycheque while they work, encouraging more Canadians to join the workforce.  It offers real help to more than two million Canadians who are working hard to join the middle class and will raise around 70,000 Canadians out of poverty by 2020.

With almost $1 billion in new funding starting in 2019, the proposed CWB will increase both maximum benefits and the income level at which the benefit is entirely phased out. As a result, a low-income worker earning $15,000 could receive up to almost $500 more from the CWB in 2019 than under the WITB in 2018 to invest in the things that are important to them. Unlike the WITB, starting in 2019, everyone who can benefit from the CWB will receive it even if they do not claim it when they file their taxes.

Canada’s prosperity depends on making sure every Canadian has an equal and fair chance at success. That is why in Budget 2018, the Government is putting gender at the heart of its decision-making, working to help support women and girls, reduce the gender wage gap, and increase the participation of women in the labour force—which helps boost economic growth for all Canadians. Advancing women’s equality in Canada will drive economic growth, while boosting the income of Canadian families. More women in leadership positions won’t just grow the economy, create jobs, and strengthen communities, it will also lead to innovation and change in the workplace that will benefit everyone.

Budget 2018 plans continue to invest in the middle class and take significant steps to ensure everyone has the opportunity to fully contribute to the growth of the Canadian economy.

Quotes

“All Canadians deserve to have their hard work rewarded with greater opportunities and a fair chance at success. An enhanced Canada Workers Benefit will expand opportunities for low-income working Canadians to benefit from their efforts. By helping those who need it keep more of their paycheque to put toward the things they need, the Government is helping to build a stronger economy that benefits all Canadians.”

– The Honourable Dominic LeBlanc, Minister of Fisheries, Oceans and the Canadian Coast Guard

The Globe and Mail. 8 Mar 2018. Ontario heading into deficit in pre-election budget. Government’s vow of billions in new health-care, child-care spending breaks key promise to get province out of the red
JUSTIN GIOVANNETTI

It took the Ontario government a decade to balance its budget; now, after a single year of showing a surplus, the province’s books are headed back into deficit with promises of new spending before the next election.

Finance Minister Charles Sousa said that Ontario’s Liberal government will promise billions in new spending on health care and child care, creating a deficit of up to $8-billion in a pre-election budget that will be tabled on March 28.

The spending document will break a key promise by the party to get the province out of the red.

The deficit comes at a time when Ontario’s economic engine has been roaring. The economy grew at its fastest rate in seven years in 2017 and is expected to top 2-per-cent growth this year. Unemployment is also near its lowest level in decades.

“We will be running a deficit, starting next year at less than 1 per cent of GDP. Our budget will have a clear path to track back to balance. But let’s be clear, we are making this choice deliberately,” Mr. Sousa said to a business crowd in downtown Toronto.

Laying out the priorities he and Premier Kathleen Wynne will focus on when Ontarians head to the polls in early June, Mr. Sousa said the budget would commit new spending on groups that have been left behind as the province has prospered. The budget will help with the cost of child care, long-term care for seniors and elements of the health-care system struggling after years of penny-pinching by the government to get back to balance.

Mr. Sousa said the province was using the good economic times to open the spending taps. “We are choosing to put our strengthened fiscal position to work to address our priorities,” he said.

To the opposition, the announcement of a deficit was seen as an attempt to buy votes. The budget is a “final, last-ditch ploy to win the next election,” according to Progressive Conservative finance critic Lisa MacLeod.

“After promising a balanced budget for years to come, the Wynne Liberals are already changing their tune and plunging the province back into deficit. They can’t be trusted to keep their word,” she said.

New Democrat John Vanthof said the deficit promise was the sign of an “old, tired government.” Ontario’s NDP has yet to release its election platform and Mr. Vanthof would not say whether the party will promise to table a balanced budget.

Ontario’s return to deficit comes as the federal government’s budget is awash in red ink with billions of dollars of new spending, a predicted deficit of $18.1-billion in the fiscal year starting in April and no timetable for a return to balance. During its 2015 campaign, the federal Liberals had pledged to keep deficits at no more than $10-billion and balance the books by 2019.

The provincial Liberals in Ontario have been focused on slaying the province’s deficit since the aftermath of the financial crisis, when economists warned the province would face a ballooning debt unless it significantly curtailed spending. The government commissioned a report from former Toronto-Dominion Bank chief economist Don Drummond in 2012 that called for belt-tightening to return to balance by 2017.

On Wednesday, the Finance Minister could not tell reporters how large the deficit will be or when he expects Ontario’s books to be balanced again. The province’s last budget in 2017 had predicted that the books would remain balanced through to 2020.

While the province’s economy is currently strong, the risk of a collapse in the North American free-trade agreement, the growing presence of Buy American legislation and the promise of tariffs on steel and aluminum by U.S. President Donald Trump have led to predictions of significant economic risks in the future, according to Mr. Sousa.

But the future risk of a recession is a good reason not to run a deficit, according to economist Trevor Tombe at the University of Calgary. “To run a deficit in anticipation of a negative shock is the opposite of what you should be doing,” he told The Globe and Mail.

“To properly prepare for negative economic shocks you need to run surpluses to reduce your debt burden. You need to reload your fiscal cannon, so that when the shock occurs, that’s when you’re forced into a deficit.”

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LGCJ.: