CANADA ECONOMICS

US TARIFFS ON STEEL AND ALUMINIUM

PM. Itinerary for Thursday, May 10, 2018 Ottawa, Ontario - May 9, 2018

Note: All times local

Saguenay, Quebec (Obs.: o Governo do Canadá beneficiou várias empresas que atuam nos setores de aço e alumínio situadas nesse município)

12 p.m.    The Prime Minister will meet with the mayor of Saguenay, Josée Néron.

Arénade l'Université du Québec à Chicoutimi

555, boul. de l’Université Est

Notes for media :

Photo opportunity at the beginning of the meeting

Media are asked to arrive no later than 11:30 a.m.

2 p.m.      The Prime Minister will make an announcement with the Premier of Quebec, Philippe Couillard. A joint media availability will follow.

Arénade l'Université du Québec à Chicoutimi

555, boul. de l’Université Est

Notes for media:

Photo opportunity of the on-stage signing ceremony

Open coverage of the media availability

Media are asked to arrive no later than 1 p.m. A technical briefing will take place at 1:10 p.m. 

The Globe and Mail. 10 May 2018. Federal Liberals to unveil funding for Quebec aluminum. Aluminum: Rio Tinto looking to increase capacity at its Quebec facilities, CEO says. 
DANIEL LEBLANC, OTTAWA

Prime Minister Justin Trudeau is heading to Saguenay on Thursday to make a funding announcement with Rio Tinto, the aluminum producer located in the Quebec region where there will soon be a byelection, federal officials said.

Federal officials said Mr. Trudeau will make the announcement alongside Quebec Premier Philippe Couillard and executives from Rio Tinto, which has promised to expand its aluminum production capacity in Canada. Details of the project have yet to be publicly released.

Opposition critics are accusing the Liberal Party of playing politics to influence the outcome of the impending vote in Chicoutimi-Le Fjord, a riding that has been vacant since Dec. 1, 2017.

The Conservatives have been calling for months for the by-election to be called, and now accuse Mr. Trudeau of having deliberately delayed the vote.

“If Mr. Trudeau thinks that he can buy votes with these big announcements before calling the byelection … it’s up to him. I think people are smart enough and we can’t wait for the actual campaign to start,” Conservative MP Alain Rayes said.

NDP MP Alexandre Boulerice said his party agrees with giving federal help to the aluminum industry in the context of the renegotiation of the NAFTA deal.

The White House has given Canada and Mexico a temporary exemption from its steel and aluminum tariffs, which expires on June 1.

However, Mr. Boulerice added the coming announcement with Rio Tinto “has the pungent smell of electoral opportunism.”

The Liberals won Chicoutimi-Le Fjord in the 2015 general election, taking the riding from the hands of the NDP. However, Denis Lemieux quit in 2017 after only two years as a Liberal MP.

Mr. Trudeau must call the by-election to replace Mr. Lemieux before June 2, although he is expected to drop the writ sometime this month.

The Liberal Party announced this week that it had selected businesswoman Lina Boivin as its candidate. She will run against Conservative candidate Richard Martel, who used to coach the local junior hockey team and has a high public profile in the area. The NDP is expected to nominate union official Eric Dubois as its candidate.

The federal Liberals are well positioned in Quebec, according to recent public-opinion polls. The party won a surprise victory in a byelection over the Conservatives last year in the nearby riding of Lac-Saint-Jean, fuelled in large part by Mr. Trudeau’s personal popularity.

Still, the federal government announced shortly before that by-election call that it would provide more than $10-million in funding to expand the cellphone coverage and internet access in the region.

Liberal MP Richard Hébert, who won the LacSaint-Jean by-election, said Ms. Boivin is exactly what Chicoutimi-Le Fjord needs. She leads a firm called Boivin Management that provides planning and strategic advice to companies.

“For people in the Saguenay, the fact that she is known for her business acumen will be a huge boost,” he said.

International Trade Minister François-Philippe Champagne, who represents a riding located south of the Lac-Saint-Jean, said the federal government will continue to support Canada’s aluminum industry. He said he will campaign alongside Ms. Boivin during the by-election.

“I look forward to working with her, to being on the ground with her, to tell people that they already have many voices in Ottawa, and that adding another voice will serve their interests,” he said.

Rio Tinto Aluminium chief executive Alfredo Barrios has said the company is looking to add another 250,000 tonnes of production capacity at its Alma, Que., smelter and 400,000 tonnes at its leading-edge AP60 facility in Saguenay.

NAFTA

THE GLOBE AND MAIL. REUTERS. MAY 10, 2018. Magna raises 2018 forecasts, stays cautiously optimistic on NAFTA

Magna International’s chief executive said on Thursday he was “cautiously optimistic” that talks to renegotiate NAFTA would result in a competitive trade deal, after the Canadian auto parts maker raised its full-year sales and profit forecasts.

Canadian, Mexican and U.S. officials have been locked in intense negotiations for more than eight months to modernize the North American Free Trade Agreement (NAFTA) but rules around automotive industry content have emerged as a key sticking point.

To be exempt from duties, the U.S. has argued that autos should be composed of 75 per cent North American auto content, up from the current 62.5 per cent.

While a higher North American content would benefit Magna as the region’s largest auto parts supplier, negotiators must also weigh car makers’ needs, CEO Don Walker said.

“In theory, Magna is the biggest beneficiary because we’re the biggest supplier here,” he said. “But if it goes too high, that means the car companies say I can’t meet it.”

Walker told the company’s annual general meeting in Ontario that he was “cautiously optimistic” the talks would lead to a deal “that’s not too bureaucratic” and “keeps NAFTA competitive.”

Earlier, Magna reported higher-than-expected quarterly profit and raised its full-year sales target to $40.9 billion to $43.1 billion, up from its previous forecast range of $39.3 billion to $41.5 billion.

It forecast 2018 net income of $2.4 billion-$2.6 billion, slightly higher than its previous projection of $2.3 billion-$2.5 billion.

The company expects more than $6 billion in free cash flow between 2018 and 2020 amid higher revenues and lower capital expenditures, Magna Chief Financial Officer Vince Galifi said.

Magna shares were up 3.8 per cent at $81.13 in afternoon trading, while the benchmark Canada share index was up 0.5 per cent. The stock has risen 13.6 per cent this year, compared with a 1.8 per cent fall in the benchmark index in the same period.

Magna expects to grow sales faster than vehicle production through 2020 as it launches new programs, such as its autonomous car agreement with Lyft, even as demand is expected to soften in the key North American market this year.

Sales at the business that assembles cars under contract from manufacturers rose more than threefold to $1.66 billion in the first quarter ended March 31.

BLOOMBERG. 10 May 2018. Business. Red Tape in New Nafta Could Drive Automakers Away, Magna Warns
By Kristine Owram and Greg Quinn

• Top parts supplier wary of excessive ‘administrative burden’
• Cars remain key bone of contention as U.S. pushes for deal
• Canada's Baird Says Nafta Sunset Clause Would Be 'Disastrous'

The head of North America’s biggest auto parts supplier says automakers will move more production offshore if changes to Nafta make it too complicated, echoing a similar warning from Canada’s foreign minister.

Magna International Inc. Chief Executive Officer Don Walker, speaking Thursday at his company’s annual meeting north of Toronto, said any revised North American Free Trade Agreement has to encourage long-term investment and that the sector favors a “do no harm” approach.

“The end objective is Nafta has to be competitive because we’re in a global industry, and every country in the world is trying to attract automotive,” he said.

Walker spoke as Nafta negotiations continue in Washington in a push to reach a deal this month, in time to pass it through the current U.S. Congress. Ministerial negotiations have focused on auto rules, with countries looking set to raise the share of a car that must be built domestically to be traded under Nafta, while also potentially expanding the amount of parts whose origin must be tracked.

“I just hope they don’t put so much administrative burden on us that it costs a fortune to track it all,” the Magna CEO said.

The U.S. wants almost half of every car be built by workers making at least $16 an hour, a demand that Mexico opposes given its labor costs are lowest among Nafta nations. Canada is open to the idea, but the issue remains in flux as talks continue.

“If we drove the labor for everything in Mexico up, even doubled it, then that means you’re not competitive anymore in a lot of the products and it all goes back to China,” Walker said. “Trying to just say you have to raise wages above and beyond what supply and demand is dictating is going to be damaging.”

Foreign Minister Chrystia Freeland, who is Canada’s lead minister on the file, also warned against adding too much regulation under a new Nafta. If that happens, she said automakers could just not bother and instead pay tariffs, which are relatively low.

“Making a mistake could mean burdening companies with far too much red tape, something that’s too cumbersome, that makes North America less competitive compared to the rest of the world. That’s certainly an issue that I’m very focused on,” Freeland told reporters Wednesday in Washington, in comments aired by the Canadian Broadcasting Corp.

“I want the rules that we come up with to be rules that don’t force our car companies and our car parts companies to be spending too much time on administration.”

— With assistance by Josh Wingrove

REUTERS. MAY 10, 2018. Mexico expects to know soon if short-term NAFTA deal possible
David Ljunggren

WASHINGTON (Reuters) - Mexico’s Economy Minister Ildefonso Guajardo said Thursday he expected to find out within the next two days if a new NAFTA deal with the United States and Canada was possible in the short term.

As time runs out to secure some kind of agreement, major differences remain between the three members of the North American Free Trade Agreement after more than eight months of negotiations.

“I think we will be finding out through the day and tomorrow ... if we really have what it takes to be able to land these things in the short run. We are finding out that possibility,” Guajardo told Reuters.

A source close to the talks said U.S. officials have told Canada and Mexico that May 17 or 18 is the deadline for a deal that could be dealt with by the current U.S. Congress. A second source confirmed that those dates had been discussed.

Top-level talks between the United States, Canada and Mexico to update NAFTA have made little headway this week as the United States and Mexico sought to settle differences over the key issue of automobiles.

U.S. Trade Representative Robert Lighthizer wants a quick deal to avoid running into complications caused by a Mexican presidential election on July 1 and U.S. midterm elections to Congress in November.

Guajardo, speaking outside Lighthizer’s offices, said he had the commitment “to try to really get a solution” from the talks.

Asked if he was prepared to continue negotiations on Friday, Guajardo said: “Definitely, we will be here, we are available. We have suitcases for two weeks if necessary.”

Mexico has launched a counterproposal to U.S. demands to toughen automotive industry content rules and boost wages. U.S. President Donald Trump blames cheaper wages in Mexico for manufacturing job losses in the United States.

Many other major issues crucial to a deal are still unresolved, including U.S. demands for a five-year sunset clause, and elimination of settlement panels for trade disputes.

After meeting with Lighthizer, Guajardo told reporters that Thursday’s talks were “a very rich exercise.”

“It’s not only the autos. You cannot think that in a process of negotiations we’re going to solve one item without reviewing the overall balance of the agreement,” he said. “We’re going over all the items. It’s very important to stress that.”

Reporting by David Ljunggren; Additional reporting by Anthony Esposito; Writing by David Ljunggren and Anthony Esposito; Editing by Chizu Nomiyama and Nick Zieminski

REUTERS. MAY 10, 2018. Canadian dollar seen rising as NAFTA clarity boosts BOC confidence
Fergal Smith

TORONTO (Reuters) - The Canadian dollar is expected to strengthen over the coming year as a clearer outlook for the NAFTA trade pact opens the door to more Bank of Canada interest rate hikes, a Reuters poll of currency strategists showed.

The loonie CAD= has weakened in recent weeks against a broadly stronger U.S. dollar .DXY despite the price of oil CLc1, one of Canada’s major exports, surging to its highest in more than three years.

Strategists said the loonie has been pressured by the Bank of Canada’s caution on raising interest rates too fast in the face of a number of uncertainties for the domestic economy, such as a cooling housing market and renegotiation of the North American Free Trade Agreement.

“There is a lot of focus on NAFTA and other political noise at the moment, that is dampening the Canadian dollar,” said Shaun Osborne, chief currency strategist at Scotiabank. “Once we get some clarity on that, hopefully in the next few weeks, I expect the Canadian dollar to strengthen.”

Ministers from Canada, the United States and Mexico have been pushing this week for a deal to rework the 24-year-old accord, seeking to resolve an impasse in key areas before elections in Mexico and the United States complicate the process.

Canada sends about 75 percent of its exports to the United States so its economy could benefit if a deal is reached.

The poll of more than 45 foreign exchange strategists predicted that the loonie will rise to C$1.26 to the greenback, or 79.20 U.S. cents, in three months, from around C$1.277 on Thursday.

The currency, which hit a nearly seven-week low on Tuesday at C$1.2998, is then expected to climb further to C$1.24 in a year.

“The Canadian dollar remains much weaker than levels that would typically be associated with current oil prices,” said Krishen Rangasamy, a senior economist at National Bank Financial.

Oil has been boosted this week by U.S. President Donald Trump’s decision to quit a nuclear deal with Iran. [O/R]

Rangasamy expects uncertainties related to NAFTA and the housing market to fade in coming months and for the Bank of Canada to turn its focus to rising inflation pressures.

Canada’s annual inflation rate strengthened to 2.3 percent in March, the second straight month it has exceeded the Bank of Canada’s 2.0 percent target.

The central bank has raised its benchmark interest rate, now at 1.25 percent, three times since July. Money markets, as well as economists polled by Reuters, expect the central bank to hike twice more this year.

That is less than the three additional rate increases by December some investors are expecting from the U.S. Federal Reserve. But rate hikes from the Bank of Canada could have more impact on the market because the central bank started its tightening cycle less than a year ago, much more recently than the Fed.

“The Bank of Canada has further to go than the Fed,” said Eric Viloria, a currency strategist at Wells Fargo.

(Other stories from the global foreign exchange poll:)

Polling by Mumal Rathore and Anisha Sheth; Editing by David Gregorio

REUTERS. MAY 9, 2018. NAFTA talks drag on as U.S., Mexico spar over autos
Anthony Esposito, David Ljunggren

WASHINGTON (Reuters) - Top-level talks to update the North American Free Trade Agreement made little headway on Wednesday as the United States and Mexico sought to settle differences over the key issue of automobiles, three well-placed sources said.

With time fast running out to reach a deal, the two NAFTA members are discussing a U.S. demand that a certain percentage of auto production happen in higher-wage areas of the region, a clear jab at lower-cost Mexico, said the sources, who requested anonymity given the sensitivity of the situation.

The two nations are also discussing a U.S. demand to boost the North American content of vehicles.

“Until that is settled one way or another, there is not much chance of broad progress,” said one of the sources.

The future of the North American auto industry in a renewed NAFTA is one of the toughest issues facing U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo.

Freeland met Lighthizer on Wednesday and deflected questions about the slow pace of the talks, saying Canada would take the time needed to get a good deal.

“We’ve been having productive conversations this week,” she told reporters.

Lighthizer says there are only weeks left to reach an agreement before negotiators start running into political challenges caused by a Mexican presidential election on July 1 and mid-term elections in the United States in November.

“We are still engaged. We are trying to really make sure we can ensure progress,” Guajardo told reporters.

The three ministers, who together are in charge of the talks, have not all met together since convening in Washington on Monday and officials said they were not aware of any scheduled trilateral gatherings this week.

“We are meeting as we need to meet,” said Freeland.

Mexico has launched a counterproposal to U.S. demands to toughen automotive industry content rules and boost wages.

U.S. President Donald Trump, who blames NAFTA for job losses in the manufacturing sector, has frequently threatened to walk away from the 1994 pact unless major changes are made.

Many other major issues crucial to a deal are still unresolved, including U.S. demands for a five-year sunset clause, and elimination of settlement panels for trade disputes.

The chapter on intellectual property, seen by some as less-problematic, is also far from resolved.

A biopharmaceuticals official said that the sector was pressing Lighthizer to insist on the 12-year period of patent and data exclusivity enshrined in U.S. law, while Canada was pushing for eight years.

Additional reporting by Ana Isabel Martinez and Dave Graham in Mexico City; Writing by David Ljunggren

AVIATION

EMBRAER. REUTERS. MAY 10, 2018. Embraer breakup complications are delaying its deal with Boeing: sources
Tatiana Bautzer, Brad Haynes

SAO PAULO (Reuters) - The tricky work of divvying up the three business segments of Brazilian planemaker Embraer SA (EMBR3.SA) has been delaying an agreement to combine operations with Boeing Co (BA.N), three people with knowledge of the matter said this week.

The two planemakers announced last month that they were in talks to set up a new company focused on commercial aviation, excluding Embraer’s defense division and possibly its business jet unit.

The companies have won the support of Brazil’s government for such a deal, but the maneuver has created other headaches, according to the sources, who spoke to Reuters anonymously due to the sensitivity of talks.

Negotiators are picking through the details of long-term service contracts between the companies and working on how to distribute Embraer’s thousands of engineers, many of whom have migrated between military and civilian projects during their careers.

Representatives for Boeing and Embraer did not immediately respond to requests for comment.

Embraer shares in New York (ERJ.N) erased gains after the Reuters report, falling as much as 4 percent in afternoon trade. Its Brazil-listed shares were down 2.7 percent.

The decision to leave Embraer’s defense operations separated has helped to overcome concerns about sovereign control of Embraer’s military programs by the Brazilian government, which holds a strategic veto over the deal, but it has not produced a final agreement as quickly as some expected.

“I’m quite optimistic,” said Defense Minister Joaquim Silva e Luna, who is responsible for the task force overseeing the deal, when asked about the negotiation. “It is in advanced stages and should be resolved this year.”

Boeing’s original proposal, a straightforward acquisition, could have been wrapped up by now, but it has proven more challenging to design an offer that leaves Embraer standing as a financially robust company focused on defense, the sources said.

Embraer’s 70- to 130-seat E-Jets, which compete with the C-Series program designed by Bombardier Inc (BBDb.TO) and run by Airbus SE (AIR.PA), account for about 60 percent of the Brazilian firm’s revenue and nearly all of its operating profit.

Embraer SA
23.26
EMBR3.SASAO PAULO STOCK EXCHANGE
+0.18(+0.78%)
EMBR3.SA

EMBR3.SABA.NERJ.NBBDb.TOAIR.PA

The company’s defense division has barely turned a profit in recent years, since Brazil’s government slashed military spending in an effort to close a gaping budget deficit.

Embraer has also been losing money on a fresh line-up of business jets, as the executive aviation market stagnates.

The companies have still not reached a final decision on whether to include the unit with the commercial jet division in the new company, in which Boeing would own a roughly 80 percent stake, according to two of the sources.

Reporting by Tatiana Bautzer and Brad Haynes; Additional reporting by Tim Hepher in Paris, Editing by Rosalba O'Brien

ECONOMY

StatCan. 2018-05-10. Canadian Economic News, April 2018
 
The April 2018 issue of Canadian Economic News is now available.

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

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

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

Resources

• Calgary-based Kinder Morgan Canada Limited announced on April 8th that it is suspending all non-essential activities and related spending on the Trans Mountain Expansion Project. The company said that, under current circumstances, it will not commit additional shareholder resources to the Project, and that it will consult with various stakeholders in an effort to reach agreements by May 31st that may allow the Project to proceed.
• On April 16th, the Government of Alberta introduced new legislation that would give the province the power to restrict the export of natural gas, crude oil and refined fuels across its borders. The Government said that, if passed, the legislation would give it authority to, if necessary, require any company exporting energy products from Alberta to obtain a licence, and that export restrictions could be imposed on pipelines, as well as transport via rail or truck.
• On April 23rd, the Government of Saskatchewan introduced Bill 126, The Energy Export Act, for first reading that would establish a permitting process for individuals or corporations seeking to export oil, gas, and refined petroleum products outside the province.
• On April 26th, the Government of British Columbia announced it had submitted a reference question to the B.C. Court of Appeal asking the court to review proposed amendments to the Environmental Management Act that would give the Province authority to regulate impacts of heavy oils, like diluted bitumen, transported through the province.
• The Canada-Nova Scotia Offshore Petroleum Board (CNSOPB) announced it had granted an Approval to Drill a Well (ADW) to BP Canada Energy Group ULC (BP Canada), and had authorized the commencement of drilling operations for BP Canada's Aspy D-11 exploration well approximately 330 kilometers off the coast of Halifax.
• The State of Minnesota Office of Administrative Hearings announced that the Administrative Law Judge recommends that the Minnesota Public Utilities Commission grant Calgary-based Enbridge Energy's Application for a Certificate of Need, but only if the Commission also selects Route Alternative 07 (in-trench replacement) as the designated route for Enbridge's proposed Line 3 Replacement Project.
• Calgary-based Vermilion Energy Inc. announced it had entered into an arrangement agreement to acquire Spartan Energy Corp., also of Calgary, for a total consideration of approximately $1.4 billion. The company said the arrangement is subject to Spartan shareholder and regulatory approvals, and is expected to close on or about June 15, 2018.
• Calgary-based Husky Energy Inc. announced a series of planned turnarounds, including a five-week partial turnaround at the Lloydminster Upgrader in the second quarter; a five-week turnaround at the Superior Refinery in the second quarter; a three-week turnaround at Tucker in the third quarter; a five-week partial turnaround at the Lima Refinery in the fourth quarter; a three-week turnaround at the SeaRose floating production, storage, and offloading (FPSO) vessel expected to start in the second quarter; and a four-week turnaround at the Terra Nova FPSO in the third quarter.
• Texas-based Fluor Corporation announced that its joint venture partnership with JGC Corporation of Japan was selected as the engineering, procurement and construction contractor for LNG Canada's proposed liquefied natural gas (LNG) export facility in Kitimat, British Columbia. The company said the award is conditional on a positive final investment decision later this year.

Retail

• Concord, Ontario-based Toys "R" Us (Canada) Ltd. announced it had received both U.S. and Canadian court approval for its sale to Fairfax Financial Holdings Limited of Toronto for $300 million. Toys "R" Us said the transaction is expected to close this quarter, subject to customary closing conditions, including remaining court and applicable regulatory approvals.

Other news

• The Bank of Canada maintained the target for the overnight rate at 1.25%. The last change in the target for the overnight rate was a 25 basis-point increase announced in January 2018.
• The Government of Prince Edward Island tabled Budget 2018 on April 6th, which included new investments in health care, education and housing, a small business tax cut, and a $1,000 increase in the Basic Personal Amount over two years. The Government forecasts a $1.5 million surplus in 2018-19 and GDP growth of 1.7% in 2018.
• The Government of Saskatchewan tabled its 2018-19 Budget on April 10th, which included increased spending on health care, social services and assistance, protection of persons and property, and education. The Government forecasts a $365 million deficit in 2018-19 and GDP growth of 1.3% in 2018.
• Newfoundland and Labrador's minimum wage increased from $11.00 per hour to $11.15 per hour effective April 1st.
• Prince Edward Island's minimum wage increased from $11.25 per hour to $11.55 per hour on April 1st.
• New Brunswick's minimum wage increased from $11.00 per hour to $11.25 per hour on April 1st.
• Nova Scotia's minimum wage increased from $10.85 per hour to $11.00 per hour for experienced employees on April 1st.
• The Northwest Territories' minimum wage increased from $12.50 per hour to $13.46 per hour on April 1st.
• The Yukon's minimum wage increased from $11.32 per hour to $11.51 per hour on April 1st.
• The Government of Ontario announced that, effective April 1st, it is restricting its government entities from entering into certain procurement contracts with suppliers from New York State, in response to New York State's recent "Buy American" legislation. The Government said that should New York agree to repeal its "Buy American" restrictions against Ontario, it would immediately repeal its regulations against New York as well.
• The Government of Saskatchewan announced it had launched a constitutional reference case in the Saskatchewan Court of Appeal to challenge the federal government's ability to impose a carbon tax on the province.
• The Government of British Columbia announced it had introduced legislation, the Cannabis Distribution Act, that will establish provincial control over the sale, supply and possession of non-medical cannabis, and establishes licensing of private cannabis retailers. The Government also said the act outlines restrictions on the possession, personal cultivation and consumption of cannabis by adults and prohibitions for minors.
• U.S. President Donald Trump issued two proclamations on April 30th authorizing modifications of the Section 232 tariffs on steel and aluminum, which extended the temporary exemptions of Canada, Mexico, and the European Union from aluminum and steel tariffs proclaimed in Proclamations 9704 and 9705 respectively, until June 1st, 2018.
• Washington-based Amazon.com, Inc. announced plans to expand its Vancouver Tech Hub and create an additional 3,000 jobs in fields including e-commerce technology, cloud computing, and machine learning. The company said it will expand into a new location in QuadReal's The Post redevelopment when the project opens in 2022.
• Ottawa-based Mitel Networks Corp. announced it had signed a definitive arrangement agreement to be acquired by an investor group led by affiliates of Searchlight Capital Partners, L.P. of the United Kingdom in a transaction valued at approximately $2.0 billion. Mitel said the transaction is expected to close in the second half of 2018, subject to customary closing conditions, including receipt of shareholder, regulatory and court approvals.
• Montreal-based Transcontinental Inc. announced it had entered into a definitive agreement to acquire the business of Coveris Americas of Illinois for approximately $1.72 billion. Transcontinental said the acquisition is expected to be completed in the third quarter of its fiscal year 2018, subject to customary closing conditions and receipt of applicable antitrust approvals.
• Toronto-based The Stars Group Inc. announced it had agreed to acquire Sky Betting & Gaming of the United Kingdom in a transaction valued at $4.7 billion. The Stars Group said it anticipates completing the transaction in the third quarter of 2018 conditional upon customary approvals from the Toronto Stock Exchange, NASDAQ, and certain gaming and other regulatory authorities, as well as the completion of other customary closing conditions.

United States and other international news

• The European Central Bank (ECB) left the interest rate on the main refinancing operations of the Eurosystem unchanged at 0.00%, and the interest rates on the marginal lending facility and the deposit facility unchanged at 0.25% and -0.40%, respectively. The ECB also confirmed that net asset purchases will continue at a monthly pace of €30 billion until the end of September 2018.
• The 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.
• 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.
• The Office of the U.S. Trade Representative (USTR) on April 3rd published a proposed list of products imported from China that could be subject to additional tariffs. The initial list included approximately 1,300 tariff lines valued at an estimated USD $50 billion. The USTR said that sectors subject to the proposed tariffs include aerospace, information and communication technology, robotics, and machinery, and that the list will undergo further review in a public notice and comment process, including a hearing. The Chinese government on April 4th published a list of 106 goods imported from the United States that could be subject to additional tariffs, valued at approximately USD $50 billion.
• The European Commission announced that the European Union (EU) and Mexico have reached a new agreement in principle on trade, part of a broader, modernized EU-Mexico Global Agreement. The Commission said that, under the new agreement, practically all trade in goods between the EU and Mexico will be duty free, including in the agricultural sector.
• Michigan-based Ford Motor Company announced that by 2020 almost 90% of the Ford portfolio in North America will be trucks, utilities and commercial vehicles, and that, given declining consumer demand and product profitability, the company will not invest in next generations of traditional Ford sedans for North America. Ford also announced it was planning to spend USD $29 billion in capital from 2019 to 2022, $5 billion lower than its previous announcement of $34 billion over the same period.
• Ohio-based Marathon Petroleum Corp. and Andeavor of Texas announced they had entered into a definitive merger agreement under which Marathon will acquire all of Andeavor's outstanding shares, representing a total equity value of USD $23.3 billion. The companies said the transaction is expected to close in the second half of 2018, subject to shareholder and regulatory approvals.
• Washington-based T-Mobile US and Sprint Corporation of Kansas announced they had entered into a definitive agreement to merge in an all-stock transaction for a total implied enterprise value of approximately USD $146 billion for the combined company. The companies said the transaction is expected to close no later than the first half of 2019, subject to customary closing conditions, including regulatory approvals.

Financial market news

• Crude oil (West Texas Intermediate) closed at USD $68.57 on April 30th, up from $64.94 at the end of March. The Canadian dollar closed at 77.91 cents U.S. on April 30th, up from 77.56 cents U.S. on March 29th. The S&P/TSX closed at 15,607.88 on April 30th, up from a closing value of 15,367.30 at the end of March.

INTERNATIONAL TRADE

EDC. May 10, 2018. WEEKLY COMMENTARY. What’s up with Canada’s exports? Canada’s exports heat up again
Peter Hall, Vice-President and Chief Economist

‘Up’ wasn’t the adjective of choice for Canadian exports in the opening months of this year. Momentum was decent as 2017 closed out. However, January and February numbers all but smothered that. It left Canada with an unwanted paradox: strengthening world (and US) growth, with not much to show for it on our bottom line. Are the glory days passing us by, or is there some other reason behind current weakness?

Export growth is on-again, off-again

Funny, a year ago we weren’t having this conversation. In fact, at that time exports were rocketing higher. It looked like payback time, that Canada was actually capitalizing on stronger US and world growth. That rapid runup melted in the second half of the year, a hit that was shared by both the oil and gas sector and a North American auto industry that had gotten a bit ahead of itself. A handy recovery at year-end paved the way for growth this year, but January and February declines sawed off gains completely. Thankfully, this was contained; tight rail capacity caused a temporary plunge in agricultural shipments, and the both the auto and industrial equipment sectors underwent fluctuations that are typical in both industries.

Even so, by all counts this shouldn’t really be happening. After all, US GDP growth has recently been doing well, not to mention the ramp-up in European growth. Numbers in both economies are outpacing original expectations, and forecasts have been revised upward. Not to mention that we have the CETA agreement with Europe that kicked in last fall; everyone was expecting dividends, not losses. Layer in the continued rapid growth of emerging markets, and the story ought to be much more positive than our early-year results.

Thankfully, March came to the rescue, proving the underlying strengths powering our exports, and the transitory nature of the things that held us back in the early going. March’s 3.7 per cent growth surge more than erased the losses sustained in the first two months of the quarter, generating overall quarterly growth of 1 per cent. March was strong for another reason: although the Canadian dollar shed 3 per cent of its value against the greenback, it wasn’t the primary driver of monthly growth. The physical volume of shipments formed the bulk of monthly growth, up 3 per cent.

On a sector-by-sector basis, the story was part relief, part inspiration. The agriculture sector surprised with an earlier-than-expected comeback. Aerospace – typically volatile – was up by double-digits, which is the performance we expect for the year. Even more inspiring was the monthly rise in industrial machinery and equipment, which is related to the US economy’s need to ramp up investment. Stateside, many industries are dealing with constraints on productive capacity that are as tight or tighter than they were in the peak years of 2006-08.

This turns our gaze on the future. Are we going to continue the on-again, off-again pattern, or is growth going to become a bit more dependable? Fluctuations will never be a thing of the past in trade numbers, but on balance, March data demonstrate that Canada is currently in the global growth game. A number of factors suggest growth will persist throughout the year. First, the US is facing capacity pressures inside its economy, and will be looking to others to fill in gaps in labour and production. Second, the Canadian dollar is expected to remain weak. Third – and this is more speculative – resolution of the NAFTA deliberations would restore a good deal of certainty to Canadian exporters and their investment plans.


EDC’s export forecast sees 6 per cent growth in 2018

Before today’s data, we were a bit worried about our 6 per cent export forecast for the year. Building on the March result as the year unfolds has us feeling much better about our 6 per cent growth forecast. Global growth has never for us been the worrisome issue; it’s Canadian participation in that growth that form the bulk of our early-year concerns. US industry is still humming, and prospects there, and by extension in the rest of the world, are as good or better than they have been in years.

The bottom line?

‘Up’ is again in Canada’s trade language. March was a great down-payment on growth that should stretch through year-end. Prospects have long looked bright, and once again, we are cashing in.

Department of Finance Canada. May 9, 2018. Minister Morneau Announces Appointment to Canadian International Trade Tribunal

Ottawa, Ontario – The Government of Canada is committed to a rigorous approach to Governor in Council appointments, in which open, transparent and merit-based selection processes result in highly qualified candidates able to best serve the interests of Canadians.

In keeping with this commitment, Finance Minister Bill Morneau today announced the appointment of Jean Bédard as Chairperson of the Canadian International Trade Tribunal (Tribunal). This appointment is for a term ending on July 31, 2020.

Mr. Bédard has been acting Chairperson of the Tribunal since May 2016, and a member since July 2014. He is also currently the Co-Chair of the Chairperson's Forum of the Administrative Tribunals Support Service of Canada. Prior to joining the Tribunal, he practised corporate and commercial law with a specialization in domestic and international franchising, and was a Deputy Judge of the Small Claims Court of Ontario (Toronto Region and East Region). Mr. Bédard's legal career began when he was called to the Quebec Bar in 1975.

Quote

"The Canadian International Trade Tribunal is recognized at home and around the world as a centre of excellence in the fair and timely adjudication of trade law matters. The vast business and legal experience that Mr. Bédard brings to this role will be a valuable asset to the Tribunal, and I congratulate him on this appointment."

- Bill Morneau, Minister of Finance

Quick Facts

• The Canadian International Trade Tribunal is an independent quasi-judicial adjudicative body reporting to Parliament through the Minister of Finance. 
• The Tribunal conducts injury inquiries into dumping and subsidy complaints; hears appeals of decisions of the Canada Border Services Agency and the Canada Revenue Agency; inquires into complaints by potential suppliers concerning procurement by the federal government covered under various trade agreements; conducts safeguard inquiries; and provides advice to the Government and/or to the Minister of Finance on economic, trade and tariff issues. 
• The Chairperson has supervision over and direction of the work of the Tribunal, including the assignment of members to hear, and to preside over, hearings of the Tribunal, and the management of its internal affairs. 

Canadian International Trade Tribunal: http://www.citt.gc.ca/en/home

G7

Global Affairs Canada. Summits Management Office. May 9, 2018. G7 Ministerial Meeting on Investing in Growth That Works for Everyone

Ottawa, Ontario — The Honourable Marie-Claude Bibeau, Minister of International Development and La Francophonie, and the Honourable Bill Morneau, Minister of Finance, along with Stephen Poloz, Governor of the Bank of Canada, will co-host a meeting of G7 Finance and Development Ministers, and Central Bank Governors, on the theme of “Investing in Growth That Works for Everyone” from May 31 to June 2, 2018, in Whistler, British Columbia.

DEFENCE

Global Affairs Canada. May 10, 2018. Parliamentary Secretary Leslie to attend events marking NORAD’s 60th anniversary

Ottawa, Ontario - Lieutenant-General (Retired) the Honourable Andrew Leslie, Parliamentary Secretary to the Minister of Foreign Affairs (Canada-U.S. Relations), today announced he will attend events to mark the 60th anniversary of the creation of NORAD, in Colorado Springs, Colorado, on May 11 and 12, 2018.

While in Colorado, the Parliamentary Secretary will meet with elected officials, including John W. Hickenlooper, Governor of Colorado, as well as representatives of academia and the private and public sectors, to discuss the importance of NAFTA as an engine of growth and prosperity for the United States, including Colorado.

Quotes

“The 60 years of aerospace cooperation within NORAD is yet another example of the close cooperation between Canada and the United States. With 400,000 people and $2.5 billion in goods and services crossing our shared border every day, we have a joint responsibility to protect our region.”

- Andrew Leslie, Parliamentary Secretary to the Minister of Foreign Affairs (Canada-U.S. Relations)

Quick facts

• NORAD is responsible for aerospace warning, aerospace control, and maritime warning for North America. It is a symbol of the deepest, most integrated military relationship in the world.
• NAFTA is the biggest and most comprehensive economic agreement in the world, with a regional market of 480 million consumers and a combined GDP of $27 trillion.
• As part of the negotiations to modernize NAFTA, ministerial meetings are continuing in Washington, D.C. The Government of Canada’s objective in these negotiations is to reach a fair agreement that benefits all three partners. Canada continues to play a proactive role in talks and has put forward proposals to help bridge gaps in several areas.

North American Aerospace Defence Command (National Defence): http://www.forces.gc.ca/en/about-org-structure/norad.page

What we do

The North American Aerospace Defense Command (NORAD) is a bi-national military organization established in 1958 by Canada and the United States. We monitor and defend North America through aerospace warning, aerospace control and maritime warning.

The commander of NORAD is appointed by and is responsible to both the Government of Canada and the Government of the United States. Traditionally, NORAD commanders are U.S. generals and deputy commanders are Canadian lieutenant-generals.

Specific roles

NORAD warns of threats to the continent by monitoring and tracking man-made objects (such as aircraft and ships) in North American airspace and waters. NORAD also provides surveillance and operational control of Canadian and U.S. airspace.

The NORAD Command Centre operates a worldwide system of sensors to accomplish these critically important missions.

The three NORAD regions are:

• The Alaskan NORAD Region (ANR) conducts continuous surveillance and control of Alaskan airspace and is headquartered at Joint Base Elmendorf-Richardson, Alaska.
• The Canadian NORAD Region (CANR) identifies and tracks all aircraft entering Canadian airspace and exercises operational command and control of all air defence forces in Canada. It is headquartered with the 1 Canadian Air Division in Winnipeg, Manitoba.
• The Continental U.S. NORAD Region (CONR) executes the NORAD air sovereignty mission for the continental United States and is headquartered at Tyndall Air Force Base, Florida.

See also:

• Canada-United States relations: http://international.gc.ca/world-monde/united_states-etats_unis/relations.aspx?lang=eng
• North American Aerospace Defence Command (NORAD): http://www.norad.mil/
• Canada’s foreign policy - Global Affairs Canada: https://www.facebook.com/CanadaFP/

________________

LGCJ.: