CANADA ECONOMICS
INTERNATIONAL TRADE
Global Affairs Canada. June 19, 2018. Opening remarks by the Honourable Chrystia Freeland, Minister of Foreign Affairs, for an appearance before the Standing Committee on International Trade. Speech
Ottawa - Thank you, Mr. Chair. I’d like to begin by acknowledging that we are gathered on the traditional territory of the Algonquin.
I’m here today to speak about the Canada-U.S. trade relationship and I would like to take this opportunity to thank Canadians and leaders from across the country for our unified, Team Canada approach. I am very humbled and appreciative of this collective effort, and I would specifically like to recognize Canada’s premiers, labour leaders, business leaders and the NAFTA Council for their tremendous efforts to date. Also, to MPs from all parties, mayors, civil society and so many Canadians: thank you.
The Canada-U.S. economic relationship is an important relationship, and one of the things that has been so valuable to Canada is the fact that Canada is playing as a totally united team. That is absolutely essential. That is a powerful message for all Canadians and it’s a powerful message for Americans.
Thank you, Mr. Chair and fellow colleagues, for providing me with this opportunity to address the committee today. I will do my best to share the government’s point of view on the tariffs imposed by the United States on Canadian steel and aluminum and, more generally, on the status of NAFTA negotiations.
Let me begin with the tariffs.
Mr. Chair, Canada is the United States’ closest friend, ally and neighbour. We share the longest non-militarized border in the world. Our soldiers fought and died side by side in the First World War and Second World War, and in Korea, Afghanistan and Iraq. As I have now repeatedly stated, the idea that we can pose a threat to U.S. national security—which is the pretext under which our neighbours imposed these tariffs on Canadian steel and aluminum exports—is not only absurd, it’s insulting.
These Section 232 tariffs, Mr. Chair, are illegal under WTO and NAFTA rules. In fact, we have initiated a case at the WTO and have raised a case under Chapter 20 of NAFTA. As supporters of the rules-based international order, including in trade, it was very important for us to take this legal action.
Canada has no choice but to retaliate—with a measured, perfectly reciprocal, dollar-for-dollar response—and we will continue to do so. On May 31, the Prime Minister and I announced that Canada intends to impose tariffs on imports of steel, aluminum and other products from the United States—representing the total value of 2017 Canadian exports affected by the U.S. measures.
That total value is $16.6 billion, Mr. Chair—Canada’s strongest trade action since the Second World War.
Since we made that announcement, we have published two lists of goods: one list that will be subject to a 25% tariff; a second list that will be subject to a 10% tariff. These countermeasures will only apply to goods originating from the United States. They will take effect on July 1, 2018, and will remain in place until the United States eliminates its formal trade-restrictive measures against Canada. Consultations on these lists concluded on June 15.
Of particular note, Mr. Chair, in an effort to avoid any costs being passed on to Canadian families and consumers, we have purposely ensured that the products listed can be easily sourced from Canadian companies or non-U.S. trade partners.
I would like to take this occasion to thank Canadians for their input; please continue to be in touch with the Department of Finance.
As we take these steps, we act in close collaboration with our like-minded partners in the European Union and Mexico. They, too, are allies of the United States.
Mr. Chair, no one will benefit from this beggar-thy-neighbor approach. The price will be paid, in part, by American consumers and by American businesses. Canada is going to stand up in defence of the international rules-based order.
We will not escalate—and we will not back down.
Judging by the feedback I have received in the past few weeks, countless Canadians of all political stripes agree. Many have come out in support of our decision to defend Canadian workers and consumers. I would like to thank all members of the House of Commons, particularly Tracey Ramsey, for the unanimous consent motion that we passed. It is a testament to Canadian unity on this issue. I would also like to thank our provincial and territorial leaders, including Premier-designate Doug Ford, Premier Scott Moe, Premier John Horgan, as well as the Canadian Labour Congress and so many others, for their support.
One thing that I do want to point out, Mr. Chair, is that this unjustified trade action by the United States has no bearing on the ongoing negotiations between Canada, the United States and Mexico to modernize the North American Free Trade Agreement.
As far as Canada is concerned, these are entirely separate issues. That is also the case under U.S. law, strictly, given the fact that Section 232 is a national security provision.
We know that NAFTA is very much to the advantage of all three of our countries. When it comes to trade between Canada and the United States, our relationship is balanced and mutually beneficial. In fact, in goods and services overall, the United States has a slight trade surplus with Canada.
The United States also has a surplus in trade in manufactured goods, in trade in agricultural goods and in trade in steel.
And, as I know all of us are well aware, Canada is the largest market for the United States: larger than China, Japan and the United Kingdom combined.
A modernized, win-win-win deal that benefits all three NAFTA partners is possible, Mr. Chair, and we are working hard and patiently to achieve this outcome.
I made this point on Thursday when I met with U.S. Trade Representative Robert Lighthizer in Washington, D.C., and again in a conversation with him on Monday. I also had a constructive conversation with Secretary of State Mike Pompeo on Saturday, when we discussed NAFTA. I remain convinced that there is goodwill and a desire to move forward.
We feel, all three countries, that we can continue working now and that we will be working hard over the summer.
Thank you very much. I am happy now to take your questions.
The Globe and Mail. 21 Jun 2018. U.S. backtracks on Canada as national security threat. Tariffs: Freeland stands firm
MIKE BLANCHFIELD
ANDY BLATCHFORD
U.S. Commerce Secretary Wilbur Ross says Canada is not a national security threat to the United States and that a revitalized NAFTA could make the Trump administration’s tariffs on steel and aluminum go away.
Mr. Ross also acknowledged Wednesday that the United States doesn’t have a trade deficit on steel with Canada. In fact, he said it has a surplus with its northern neighbour in terms of dollar value.
Mr. Ross made the comments in Washington to a U.S. Senate committee that’s examining tariffs imposed by U.S. President Donald Trump on some of that country’s closest partners, including Canada. The duties are based on the premise the countries are threats to American national security under the controversial Section 232 of U.S. trade law.
The remarks by Mr. Trump’s point person on tariffs provided some encouragement for Foreign Affairs Minister Chrystia Freeland.
Ms. Freeland said later on Wednesday that officials have been trying to convey the message to Washington that the trade balance on steel isn’t tilted in Canada’s favour and that it poses no national security threat to the United States.
“We think that is self-evident, and that is what we have been saying from the beginning,” Ms. Freeland said of the security issue before applauding Mr. Ross’s observation on the trade balance. “[It was] good to hear all of those comments from him.”
Under a grilling by Republicans and Democrats, Mr. Ross heard concerns that looming retaliatory tariffs by allies, including Canada, Mexico and the European Union, would kill American jobs and drive up prices for consumers.
In one key exchange, Mr. Ross played down Mr. Trump’s national security rationale, and instead linked the tariffs to the unresolved renegotiation of the North American free-trade agreement.
“The Canadian steel industry is not being accused of directly and individually being a security threat,” Mr. Ross testified. “The national security implication is in the aggregate, all of the steel.”
Mr. Ross said Canada and Mexico were initially exempted from the national security tariffs “pending negotiations of NAFTA over all.”
“Unfortunately, those talks were not able to come to a conclusion,” he said. “Our objective is to have a revitalized NAFTA, a NAFTA that helps America and, as part of that, the 232s would logically go away, both as it relates to Canada and as to Mexico.”
The Trudeau government for the most part maintains there is no connection between the tariffs and NAFTA, but when asked Wednesday about a possible link, Ms. Freeland said such a question is best put to the White House.
Ms. Freeland reiterated her position that the tariffs, and Canada’s response to them, are entirely separate from the NAFTA talks.
For his part, Mr. Ross said U.S. trade representative Robert Lighthizer is optimistic NAFTA talks “could pick up steam” after Mexico’s July 1 presidential election.
Throughout Mr. Ross’s testimony on Wednesday, committee members criticized Mr. Trump’s tariffs. Democratic Senator Michael Bennett challenged Mr. Ross to say whether the United States has a trade deficit with Canada on steel.
“We don’t have a trade deficit of note [on steel],” Mr. Ross replied. “We have a surplus in dollars; we do not have a surplus in physical value.”
EDC. June 21, 2018. WEEKLY COMMENTARY. The paradox of shift: What if the popular elixir is actually…poison?
Peter Hall, Vice-President and Chief Economist
It has been quite a month. I’m just back from bringing our Global Export Forecast to audiences across Canada in EDC’s Let’s Talk Exports sessions. It’s always a busy time, but this year was even more intense. It seemed that every day, there was another event to add to an already-weighty list of exporter concerns. Top of the list was the state of relations with Canada’s key trading partner – which seemed to get more tense as the tour wore on. Well, angst culminated in the G7 meetings in La Malbaie, where the name of the place might have presaged its unfortunate outcome. What do we make of the current state of the global trade debate?
The great depression and the paradox of thrift
Every now and then in economics, a paradoxical situation comes on the scene. One of the more famous of these is the paradox of thrift, proposed in the post-Depression period by renowned economist John Maynard Keynes. In essence, he observed that the shock of unemployment and poverty in those days provoked a widespread spike in savings that persisted for years following the initial economic shock. He observed that this saving, initiated by millions to ensure that they would never again be blindsided by an economic meltdown, actually prevented the macro-economy from reviving and pulling them out of their predicament.
Here’s what’s scary about this: in this case, what seems like common logic is actually the opposite of the real solution to the problem. Knowing about the paradox of thrift should be enough to prevent us falling into the same trap again. Sadly, human instinct causes us to repeat the pattern. And if that’s true with a well-known paradox, then there’s no guarantee that we won’t fall prey to a new one.
We might already have. There’s a popular story that’s being told (and sold) today. It’s popular enough to be coming close to, and in some cases, winning elections. And in the latter cases, it’s now bringing policy changes. It’s not a new theme, but it has a new potency. It accuses trade deals of favouring the other side. That other countries are getting all the investment, and stealing your jobs. That they are subsidizing their businesses unfairly, making it impossible to compete. It panders to a general sentiment that globalization is a key cause of today’s economic ills, and that freer trade – as currently designed – doesn’t really work. It’s alive and well in the US, arguably the birthplace of modern globalization, and Western Europe, the place that knit together formerly schismatic nations into a common market.
Why is globalization seen as the enemy?
Why the neo-popularity? Globalization is a convenient punching-bag for millions of disenfranchised workers, old and young alike, in the developed world. Sub-par post-recession growth has failed to absorb them into the economy, and bereft of explanations or solutions, would-be leaders have levelled their sights at the ‘enemy without’. Meanwhile, global growth is accelerating, tight capacity is begging for new investment, and unemployment is reaching new lows: the rebound we’ve been waiting eight years for is finally here. And it is throwing the doors open to those who want to work. The disenfranchised are coming back.
Neo-protectionism isn’t the cause. Anti-trade policies are only just coming into place. The economic revival that’s unfolding before our eyes is actually a product of the old system. For the moment, globalization is intact, and it and its systems are – at long last – bringing the same prosperity that it brought in the last, long growth cycle. And the growth we are seeing today is just beginning. There are millions of workers still waiting to get in. There is clear evidence of pent-up demand in both the US and Europe. And many emerging markets have a long way to go before they will catch up to the developed world – a storehouse of potential that could easily stretch out the expansion.
This time around, it’s the paradox of shift
Trade-wrecking populism, far from being a remedy, could ruin the recovery that’s been a decade in the making. The massive, pervasive policy shift is coming at just the wrong time. The populist pivot is a pernicious paradox, promising prosperity when all it will produce is protracted penury. Telling the true tale of trade may be a tougher task, but it’s incumbent on those who know better to set a course that leads to a better place.
The bottom line?
Angst at the global economy’s painfully slow march to recovery has birthed a retro-remedy that’s no remedy at all. It’s a dose of poison at the point of cure – a shift in view that’s pure paradox. May we all realize that before it’s too late.
AVIATION
REUTERS. JUNE 21, 2018. Exclusive: Canada could make it harder for U.S. to win fighter bid - sources
David Ljunggren
OTTAWA (Reuters) - Canada is discussing changes to a multibillion-dollar fighter jet procurement process that could make it harder for a U.S. company to win the order as trade relations between the neighbors sour, two sources with direct knowledge of the discussions said.
Canada is considering whether to penalize companies from countries that have caused it economic damage, the sources said on Wednesday. While a final decision is not expected before next year and the threat could be posturing, the move shows how the Trump administration’s trade disputes are spilling over into other areas.
A spokeswoman for federal Procurement Minister Carla Qualtrough - who has overall responsibility for major purchases of military equipment - declined to comment. Sources declined to be identified as the discussions are confidential.
Boeing Co’s (BA.N) F-18 Super Hornet and Lockheed Martin Corp’s (LMT.N) F-35 fighter were among the favorites to capture the contract to supply 88 planes, worth between C$15 billion ($11.3 billion) and C$19 billion.
Defense sources have long said the Canadian air force would prefer an American-built jet, citing the importance of operating easily with U.S. armed forces.
But a change in procurement terms would give more of a chance to European suppliers: Airbus SE (AIR.PA), which makes the Eurofighter; Saab AB (SAABb.ST), which makes the Gripen; and Dassault Aviation (AVMD.PA), which makes the Rafale.
Defense sources, however, say the European jets are likely to become obsolete by around 2040, at which point they could no longer incorporate the latest technologies.
Canada has been trying unsuccessfully for almost a decade to buy replacements for its aging F-18 fighters, some of which are 40 years old. The former Conservative administration said in 2010 it would buy 65 F-35 jets but later scrapped the decision, triggering years of delays and reviews.
Ottawa has already said bids will be evaluated in part by examining whether firms competing for the order have caused any past economic damage to Canada. Officials said at the time this was aimed at Boeing, which last year launched a trade challenge against Canadian planemaker Bombardier Inc (BBDb.TO).
Government officials are now discussing whether Canada should also consider economic damage caused by governments, a clear reference to worsening relations with Washington, said the sources.
“Politically it’s hard to spend billions of dollars on contracts with a country that’s hurting you,” said one of the sources, who asked to remain anonymous given the extreme sensitivity of the situation.
However, the sources emphasized that the discussions are at an early stage and Ottawa could eventually decide to drop the proposed language.
Canada - which is due to release the exact specifications for the jets next year - has not yet finished work on the clause referring to economic damage caused by a single firm.
Boeing Co
336.62
BA.NNEW YORK STOCK EXCHANGE
-6.07(-1.77%)
BA.N
BA.NLMT.NAIR.PASAABb.STAVMD.PA
U.S. President Donald Trump last month slapped tariffs on Canadian steel and aluminum, prompting Canada to announce its own retaliatory measures. Trump has also threatened tariffs on Canadian autos, which could badly hurt the economy.
Ottawa froze talks with Boeing about the fighter jet contest but after the company’s trade challenge against Bombardier failed, Canadian officials made clear the firm would not be discriminated against if it chose to bid.
($1 = 1.3304 Canadian dollars)
Reporting by David Ljunggren in Ottawa; Editing by Denny Thomas and Matthew Lewis
REUTERS. JUNE 21, 2018. Bombardier sees 50 percent market share with revamped CRJ 900 jet
Allison Lampert
MONTREAL (Reuters) - Bombardier Inc’s revamped CRJ 900 regional jet should win “half or more” of the market against competing planes from Brazil’s Embraer SA, Commercial Aircraft President Fred Cromer told reporters on Thursday.
The Canadian plane-and-train-maker, which won an order this week from Delta Air Lines for 20 CRJ 900s with upgraded cabins, expects to make further inroads in the 76-seater market against Embraer’s E175, Cromer said at the company’s Montreal-area factory.
“We should be targeting half or better. That’s a good target for us,” Cromer said. “Half or more.”
Embraer has said its E175 accounted for 80 percent of all orders over the last five years in the key U.S. market, where most regional jets are sold.
“The current E175 has been very successful in the U.S. market, where Embraer has sold over 400 units since 2013,” the company said in a recent statement. An Embraer spokesman could not be immediately reached for comment.
Bombardier, which launched its regional jet program in the early 1990s, could not immediately provide a total figure for its market share, but said its CRJ had a higher market penetration outside the United States than the E175 and has around 2,000 regional jets in the air.
With European planemaker Airbus taking a majority stake in Bombardier’s flagship CSeries jetliner program, the company is focusing on shoring up its regional jets and turboprops with a mixture of hard-sell, and cost-cutting plans. The division has combined orders in hand for just for over 100 planes.
Cromer said the CRJ’s new Atmosphere interior, which adds bin space for carry-on luggage and other upgrades, makes the plane more competitive against the E175 which some airlines preferred for its cabin.
“I think there was a perception, depending on which version of the CRJ that the airline was operating, that the Embraer was new and an upgraded cabin versus the CRJ experience and I think we responded to that very effectively with the Atmosphere cabin,” he said.
“There’s no reason why we shouldn’t be saying we can attack half the market.”
Reporting by Allison Lampert; Editing by Chizu Nomiyama and Richard Chang
US - EU
The Globe and Mail. REUTERS. 21 Jun 2018. EU hits back against Trump tariffs with duties on U.S. goods. EU to hit U.S. imports in response to Trump tariffs Commission adopts law to put in place duties on €2.8-billion worth of American products
PHILIP BLENKINSOP, BRUSSELS
The move confirms a tit-for-tat dispute that could escalate into a full trade war, particularly if U.S. President Donald Trump carries out his threat to penalize European cars.
From page B1 The European Union will begin charging import duties of 25 per cent on a range of U.S. products on Friday, in response to U.S tariffs imposed on EU steel and aluminium early this month, the European Commission said on Wednesday.
The move confirms a tit-fortat dispute that could escalate into a full trade war, particularly if U.S. President Donald Trump carries out his threat to penalize European cars.
The Commission formally adopted a law putting in place the duties on €2.8-billion ($4.3billion) worth of U.S. goods, including steel and aluminium products, farm produce such as sweetcorn and peanuts, bourbon, jeans and motor-bikes.
“We do not want to be in this position,” EU Trade Commissioner Cecilia Malmstrom said in a statement, adding that the “unilateral and unjustified” U.S. decision had left the EU with no choice.
She called the EU response proportionate and in line with World Trade Organization rules and said that they would be removed if Washington removed its metal tariffs. EU steel and aluminium exports now facing U.S. tariffs are worth a total of €6.4-billion.
Mr. Trump hit the EU, Canada and Mexico with tariffs of 25 per cent on steel and 10 per cent on aluminium at the start of June, ending exemptions that had been in place since March.
Canada has announced it will impose retaliatory tariffs on $16.6-billion worth of U.S. exports from July 1. Mexico put tariffs on American products ranging from steel to pork and bourbon two weeks ago.
Some of the products chosen are designed to target the states of Republicans, who are seeking to retain control of both chambers of Congress in November elections.
The EU also has in reserve potential tariffs of 10 per cent to 50 per cent that it could impose on a further €3.6-billion of U.S. imports in three years’ time.
CETA
The Globe and Mail. 21 Jun 2018. Italy’s sabotage of CETA would be an own goal. Reguly: Italy’s attacks may deal serious blow to integrity of CETA
ERIC REGULY
On the trade front, Canada doesn’t have a lot going for it right now. Now CETA, the new Canada-European Union Comprehensive Economic and Trade Agreement, a deal that had looked as solid as a wheel of Parmigiano-Reggiano cheese, is in trouble thanks to a populist revolution in Italy that carries Trumpian overtones.
The question is whether Italy’s threat to sabotage CETA is a clear and present danger or just political showmanship by a barnstorming government. My guess is that it’s the latter. Just as Donald Trump hates most of the things Barack Obama created, the Italian populists hate most of the things the EU created.
Canada’s trade outlook, or lack thereof, is its greatest geopolitical and economic risk. The North American free-trade agreement is in limbo and could die. The United States has slapped tariffs on steel and aluminum from Canada, Mexico and Europe. U.S. tariffs on autos – possibly a murderous 25 per cent – might be next, a nightmare scenario for Canada, especially Ontario: About 85 per cent of the 2.2 million cars made in Canada each year are sold in the United States.
And now – Madonna! – CETA.
Last week, the Agriculture Minister of Italy’s antiestablishment government, Gian Marco Centinaio, told the newspaper La Stampa that parliament would refuse to ratify CETA. He argued that it covers only “a small part” of Italy’s protected foods and that his disapproval of CETA “is not just a nationalist position of the League,” referring to one half of the coalition – the other half is the Five Star Movement – that formed a government in late May.
His position is backed by the combative firebrand Matteo Salvini, the Interior Minister and leader of the League, a Euroskeptic, nationalist, “Italians first” party. Mr. Salvini has emerged as Italy’s most powerful political figure, and his demands and outbursts are rattling Europe on the trade and migration files. Another anti-CETA force is Coldiretti, the agricultural lobby group that called it “wrong and risky.”
Italy’s attacks, if successful, could deal a real blow to the integrity of CETA.
It was the first significant trade deal to be signed by the EU since 2011 and provisionally came into force last September, half a year after it was ratified by the EU Parliament. A rare example of democracy in action, it cannot come into full force until it is approved by all 28 EU parliaments. So far, 10 mostly small countries have done so. Meanwhile, CETA operates largely unhindered.
It is impossible to exaggerate the importance of transatlantic trade, which the Financial Times this week called “the anchor of the global economy” since the 1950s. The EU remains the world’s largest single market and is coveted by exporters and service providers everywhere. Measured by GDP per capita, it contains 12 of the 25 richest countries.
Trade between the EU and Canada and between Italy and Canada is big and expanding. In 2016, the value of EU-Canada trade was €64.3-billion (a little more than $99-billion), making the EU Canada’s second-biggest trading partner, after the United States. Canadian exports to Italy were worth $2.3-billion, up almost 3 per cent over the previous year, while Italian exports to Canada were worth $7.5-billion, up 2 per cent to a record high. Italy’s Ministry of Economic Development says Italian exports under CETA have climbed 7 per cent since last autumn alone.
The trade figures suggest Italy benefits more from CETA than Canada does, and the deal was enthusiastically supported by the previous Italian government. The main negotiator on the EU side was an Italian. Italy and the rest of the EU liked the deal because it abolished 98 per cent of Canadian customs duties, opened the public procurement market to EU companies and gave them access to Canadian services such as telecoms.
So what is the populist government worried about?
Officially, it’s the alleged lack of protection for specialty foods. CETA protects 143 EU foods by giving them “geographical indication” status, meaning only products from a certain region can use that geographical name (for instance, Prosciutto di Parma). Of that group, 41 foods are Italian, the most of any EU country. Obsessed with food counterfeiting, Italian producers want a lengthened list of protected products.
Unofficially, the Italian populists are beating up on the EU because, in good part, that’s what they were elected to do.
Mr. Salvini and his tribe of Euroskeptics and xenophobes have no love for the EU. He thinks the European Union gave Italy a raw deal on migration – and he is right. The EU has done virtually nothing to relieve the migrant pressure on Italy, which, along with Greece, has borne the brunt of the crisis. To Mr. Salvini, CETA is an EU creation, therefore suspicious.
But while Italy’s food producers are not convinced CETA handed them a great deal, food is only one Italian industry. Many others, from aerospace and autos to eyewear and pharmaceuticals, are fans of the deal – and their employment numbers are huge. Confindustria, the Italian employers’ association, has given its blessing to CETA.
The Italian technocrats and industrialists who helped design and who support CETA have a big selling job to do. With the populists in control, the Italian parliament’s ratification of CETA cannot be taken for granted. But the new government also wants to create jobs, and CETA will help. It might be the one international trade deal that survives the antitrade onslaught launched by Mr. Trump.
US - CHINA
The Globe and Mail. REUTERS. 21 Jun 2018. U.S. lawmakers urge probe of Huawei’s research on campuses
STEVEN CHASE
ROBERT FIFE
WITH FILES FROM REUTERS
It’s fairly obvious to me the Department of Education isn’t at all aware of the threat that Huawei poses, the infiltration that they have succeeded in accomplishing with a broad number of universities around the country.
JIM BANKS U.S. CONGRESSMAN
OTTAWA - U.S. lawmakers are urging their government to probe Huawei Technologies’ research activities at American universities, citing an intelligence report showing that such partnerships are a key method for China to acquire foreign technology.
A bipartisan group organized by Senator Marco Rubio and Representative Jim Banks, both Republicans, is urging Education Secretary Betsy DeVos to investigate partnerships between Huawei and 50 American universities. “We believe these partnerships may pose a significant threat to national security and this threat demands your attention and oversight,” the group said in a letter. “Huawei is not a normal private sector company the way we have grown accustomed to thinking of the commercial economy in the West.”
Article 7 of China’s 2017 National Intelligence Law says Chinese companies must “support, co-operate with and collaborate in national intelligence work and guard the secrecy of national intelligence work they are aware of.” The request by 26 U.S. senators and members of the House of Representatives comes three weeks after the publication of a Globe and Mail investigation into Huawei’s involvement on Canadian university campuses. The Globe detailed how one of China’s national companies has established relationships with leading research-heavy universities to create a steady pipeline of intellectual property that the company is using to underpin its market position in next-generation 5G mobile technology.
In at least 40 cases, the academics involved, whose work is largely underwritten by taxpayers, have assigned all intellectual-property rights to the company.
The members of Congress now asking Washington to probe Huawei include U.S. lawmakers who this week publicly warned Canada that the Shenzhen-based firm represents a threat to the Five Eyes intelligence network, which allows police, prosecutors and spies in Canada, the United States, Britain, Australia and New Zealand to exchange information to prevent espionage and terrorism.
In their letter, they cited a document from the National Intelligence Council, a centre for strategic thinking in the U.S. intelligence community, that they said identifies “research partnerships with U.S. universities … [as] a primary mode of China’s toolkit for foreign technology acquisition.”
Huawei, the world’s largest maker of telecommunications network equipment and the No. 3 smartphone supplier, has already been virtually shut out of the giant U.S. market because of national-security concerns. The chiefs of six U.S. intelligence agencies and three former heads of Canada’s spy services recently said Huawei is one of the world’s top cyberintelligence threats, adding that its 5G technology could be used to conduct remote spying, maliciously modify or steal information or even shut down systems.
Huawei in Canada declined to comment on the U.S. calls for an investigation, but suggested it wasn’t necessary in Canada.
“[We] believe Canadians understand the current complexities that exist in global politics,” said Scott Bradley, a Huawei vicepresident.
“As we have done for a decade, Huawei Canada works openly and transparently with the Canadian government, Canadian operators and other Canadian stakeholders, including Canadian universities. “
Scott Bardsley, a spokesman for Public Safety Minister Ralph Goodale, would not comment on the Huawei issue but said Canadians can be assured that the government “works diligently to monitor for security threats.”
He said the National Science Engineering Research Council, which funds university research, requires private-sector partners to “have a credible plan for exploiting the research results within Canada and demonstrate that it has the necessary expertise and resources to implement the results.”
The senators and members of the House of Representatives also cited February, 2018, testimony from FBI director Christopher Wray, who said he was ”concerned about the risks of allowing any company or entity that is beholden to foreign governments, that don’t share our values, to gain positions of power inside our telecommunications networks.”
They told The Washington Post they want American universities that have partnered with Huawei to hand over the contracts and details, particularly at schools that receive federal funding or participate in research dealing with classified information. The suggestion is that the federal funding could be withheld if the schools do not co-operate, the Post reported.
“China is using Huawei to position themselves to steal American research,” Mr. Rubio told the Post. “They are using so-called ‘research partnerships’ with over 50 American universities to exploit the openness of our schools.”
Mr. Banks told the paper he is particularly concerned about research partnerships at universities because they operate under less oversight and transparency.
“It’s fairly obvious to me the Department of Education isn’t at all aware of the threat that Huawei poses, the infiltration that they have succeeded in accomplishing with a broad number of universities around the country,” he told the Post. “Huawei is a snake in the grass. Their influence on these college campuses is alarming.”
In a series of Globe interviews with officials at Canadian universities this year, however, none seemed concerned about assertions that Huawei is a nationalsecurity threat, nor that their research is helping a Chinese company gain a global economic advantage in 5G technology despite spinning off relatively marginal economic benefits here. Instead, they lauded Huawei as a valuable partner providing much-needed funding in return for intellectual property generated by their research.
But Michael Wessel, a commissioner on the U.S.-China Economic and Security Review Commission, a watchdog that reports to Congress, called on Canada to sever its universities’ relationships with the firm.
“Huawei’s involvement with Canadian universities raises serious questions as well in light of the strong relationship between U.S. and Canadian technology and telecommunications firms, the integrated nature of our technology infrastructure and the cutting-edge research being done in Canada,” Mr. Wessel said.
WHOLESALE TRADE
StatCan. 2018-06-21. Wholesale trade, April 2018
- Wholesale sales — Canada: $63.1 billion; April 2018; 0.1% increase (monthly change)
- Source(s): Table 20-10-0074-01: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=2010007401
Wholesale sales edged up 0.1% to $63.1 billion in April. Sales were up in three of seven subsectors, accounting for 54% of total wholesale sales.
Increases in the machinery, equipment and supplies and the food, beverage and tobacco subsectors were almost completely offset by declines in the motor vehicle and parts subsector.
In volume terms, wholesale sales were unchanged at $54.8 billion.
Chart 1: Wholesale sales edge up in April
Increase attributable to higher sales in three of seven subsectors
The machinery, equipment and supplies subsector rose for the third consecutive month, up 2.3% to $13.0 billion in April. This was the largest monthly dollar increase since December 2017. Sales were up in three of four industries, led by the construction, forestry, mining, and industrial machinery, equipment and supplies industry (+5.8%). Imports of logging, mining and construction machinery have also risen for three consecutive months.
Sales in the food, beverage and tobacco subsector were up 1.9% to $12.1 billion, mainly on the strength of higher sales in the food industry (+2.0%). The gains in the food industry in April more than offset the 1.7% decline reported in March. Exports of food, beverage and tobacco products increased in April.
Wholesale sales in the personal and household goods subsector increased 1.5% to a record $8.9 billion. Sales were up in four of six industries, led by the home entertainment equipment and household appliance industry (+6.0%).
Offsetting most of the gains in April, the motor vehicle and parts subsector fell 4.0% to $11.5 billion, the largest percentage decline since November 2016. Following an 8.4% increase in March, the motor vehicle industry was down 4.6% in April. Despite the decline, sales were 2.3% higher than the same month last year. Imports of passenger cars and light trucks fell 8.9% in April, following a 13.4% gain in March.
Sales up in seven provinces
Wholesale sales rose in seven provinces in April, led by British Columbia and Quebec.
Sales in British Columbia were up 1.6% to a record $6.6 billion. The building material and supplies subsector (+8.0%) contributed the most to the gain. This was the second consecutive monthly increase for both the province and the subsector.
In dollar terms, Quebec was the second largest contributor to the increase in April, rising 0.9% to $11.5 billion, its second consecutive monthly gain. The machinery, equipment and supplies subsector (+6.3%) contributed the most to the increase in Quebec.
Sales were up in Alberta (+0.7% to $6.8 billion) and in Saskatchewan (+1.0% to $2.1 billion). Sales in the machinery equipment and supplies subsector led the gains in both provinces. This was the fourth increase in five months for Alberta, while sales increased for the second consecutive month for Saskatchewan.
Nova Scotia and Newfoundland and Labrador also recorded gains as a result of higher sales in the food, beverage and tobacco subsector. Sales in Nova Scotia rose 1.9% to $861 million, its fourth consecutive monthly gain, while sales in Newfoundland and Labrador were up 2.9% to $344 million, following three consecutive monthly declines.
Sales declined 0.7% to $32.6 billion in Ontario on weaker sales in the motor vehicle and parts subsector. This was the second decline in three months for the province.
In Manitoba, sales decreased for the third consecutive month, down 1.0% to $1.6 billion, led by the miscellaneous subsector.
Wholesale inventories edge up in April
Wholesale inventories edged up 0.1% in April to $82.6 billion, the first increase in three months. Higher inventories in four subsectors, representing 45% of total wholesale inventories, offset declines in three subsectors.
Chart 2: Inventories edge up in April
The miscellaneous subsector rose 3.4% in April, the fifth increase in six months. Increases in the agricultural supplies industry (+5.1%) led the rise.
Inventories in the building material and supplies subsector were up 1.4%, a second consecutive increase. Higher inventories were recorded in all three industries, led by the lumber, millwork, hardware and other building supplies industry (+2.1%).
The motor vehicle and parts subsector rose for the second time this year, up 0.7% in April. Inventories in the motor vehicle industry (+1.1%) contributed the most to the gain.
Inventories in the food, beverage and tobacco subsector (-2.5%) reported the largest dollar-value decline. This was the third decrease in four months for the subsector.
The inventory-to-sales ratio was unchanged at 1.31 in April. This ratio is a measure of the time in months required to exhaust inventories if sales were to remain at their current level.
FULL DOCUMENT: https://www150.statcan.gc.ca/n1/daily-quotidien/180621/dq180621a-eng.pdf
REUTERS. JUNE 21, 2018. Canada factory sales edge higher in April
OTTAWA (Reuters) - Canadian wholesale trade increased by 0.1 percent in April from March, as higher sales in the machinery, equipment and supplies subsector were largely offset by declines in the motor vehicle and parts subsector, Statistics Canada said on Thursday.
Three out of seven subsectors, representing 54 percent of wholesale trade, posted gains and sales were up in seven of the 10 provinces. Sales were unchanged in volume terms.
Sales in the machinery, equipment and supplies industry rose 2.3 percent, the third straight monthly increase, while the food, beverage and tobacco industry was up 1.9 percent, mainly on the strength of food sales, Statscan said.
Offsetting most of the gains, sales in the motor vehicle and parts sector fell 4.0 percent, the largest percentage decline since November 2016, Statscan said.
Inventories edged up 0.1 percent, the first increase in three months, with four subsectors increasing stocks.
The inventory-to-sales ratio was unchanged at 1.31 in April.
Reporting by Andrea Hopkins and Dale Smith; Editing by Bernadette Baum
DEFENCE - INTELLIGENCE
The Globe and Mail. 21 Jun 2018. Harvesting of ordinary Canadians’ data by CSIS continues, report says
COLIN FREEZE, TORONTO
BILL CURRY, OTTAWA
In SIRC’s view, [this data] was retained unlawfully.
SECURITY INTELLIGENCE REVIEW COMMITTEE REPORT
Canada’s spy service continues to collect – and keep – too much data about ordinary citizens and there is evidence some of this material is being “retained unlawfully,” a new watchdog report has found.
The findings by the Security Intelligence Review Committee (SIRC) build on past warnings about data-dredging by the Canadian Security Intelligence Service (CSIS) and come as new national-security legislation will likely soon place such data-collection practices on sounder legal footing.
The watchdog’s concerns focus on the collection of “bulk datasets” – a practice in the global intelligence world that involves constantly collecting large volumes of records about ordinary citizens – not just national-security targets – in the hope the information can help contextualize potential security threats.
It is a distinct issue from SIRC’s previously stated concerns over
CSIS practices of retaining communications “metadata,” such as the phone numbers and e-mail addresses of Canadians who were previously seen to be connected to terrorism suspects, even though they were not considered threats themselves.
SIRC does not provide examples of the specific bulk datasets CSIS is using in its work. The spy agency is amassing volumes of such data even though it “had difficulty in demonstrating to SIRC the utility of the [bulk] datasets,” the report reads. SIRC’s latest annual report to Parliament was tabled on Wednesday, just before the summer recess and one day after MPs approved Bill C-59, the national-security legislation.
The government bill, which now heads to the Senate, broadly affirms the right for federal intelligence agencies to gather volumes of data about Canadians, while placing such activities under a series of checks and balances.
It also overhauls the civilian oversight regime, folding SIRC into a new National Security and Intelligence Review Agency. While details about the specific bulk datasets held by CSIS are scant, Canada’s closest intelligence allies have said publicly they constantly gather and keep all manner of disparate datasets because such material, if analyzed together, can point to terrorist threats.
In Britain, for example, forms of financial records, telephone directories, travel logs, passport data and similar material are all in play, according to an intelligence operative who stated in a 2016 lawsuit affidavit that “without the haystack one cannot find the needle.”
About all that is known of CSIS’s forays in this realm is that since 2006, the agency has been putting different data into its Operational Data Analysis Centre (ODAC). The existence of this centre was highlighted two years ago, when Federal Court judges issued a stern public warning about CSIS’s growing designs on data.
In a 2016 ruling, the judges who oversee CSIS’s wiretap warrants said that they were kept in the dark about ODAC until SIRC urged them to look into the centre and its holdings. When they did so, they found what they considered to be illegally retained “metadata” records relating to the phone numbers and e-mail addresses of ordinary Canadians.
The findings were a major black eye for CSIS. As The Globe and Mail reported earlier this week, the spy agency is now in the midst of an effort to purge its databases of this tainted material.
But in the report released on Wednesday, SIRC says CSIS’s purging efforts are not going nearly far enough. For example, the report alleges that CSIS has held on to a dataset, first gathered in 2008, that it should have destroyed in the wake of the 2016 federal ruling.
“In SIRC’s view, [this data] was retained unlawfully,” the report says. The watchdog also writes that the metadata ruling should have forced CSIS to have a broader reckoning about how and why it is gathering data about innocent people. Yet it found “no evidence that CSIS had changed its policies and procedures with respect to the collection of bulk datasets.”
Responding to these complaints in the body of the SIRC report, CSIS officials vow to do better. But they also point out they are in the midst of a rapidly changing legal and technical environment involving high-stakes national-security investigations. Public Safety Minister Ralph Goodale, who is responsible for CSIS, told The Globe that the government bill will address some of SIRC’s long-standing concerns related to the collection of data.
“They offer a number of criticisms and suggestions for improvements,” he said in response to the SIRC report. “I’m pleased to note that CSIS has by and large accepted those recommendations and in many cases has already implemented them.”
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