CANADA ECONOMICS
US TARIFFS ON STEEL AND ALUMINIUM IMPORTS
Global Affairs Canada. June 13, 2018. Address by Minister Freeland when receiving Foreign Policy’s Diplomat of the Year Award. Washington, D.C.
Check against delivery. This speech has been translated in accordance with the Government of Canada’s official languages policy and edited for posting and distribution in accordance with its communications policy.
Tonight, I would like to speak about a challenge that affects us all: the weakening of the rules-based international order and the threat that resurgent authoritarianism poses to liberal democracy itself.
I would like to start on a personal note. In the late 1980s and 1990s, I studied and worked as a reporter in what was, first, the U.S.S.R. and, while I was living there, became independent Ukraine. In fact, I think some of my former bosses are here tonight.
My experience of watching from the inside as this vast, mighty authoritarian regime crumbled profoundly shaped my thinking.
It was a euphoric moment and one when it was tempting to imagine that liberal democracy was both inevitable and invulnerable. As Francis Fukuyama put it, we seemed to have reached “the end of history.”
Fukuyama wasn’t, of course, arguing that history had ground to a halt. Rather, he was saying that the half-century-long competition between liberalism and authoritarianism had been settled and that liberal democracy had won.
What a seductive argument!
Now, we harboured no illusions that institutions such as the WTO or the International Monetary Fund or the World Bank or the United Nations were perfect. Or that our own democracies at home—with their sausage-making methods of legislating and governing—were without flaw.
But there was a broad consensus that the Atlantic economies, plus Japan, led an international system of rules that had allowed our peoples to thrive and would surely continue to do so.
Critically, this was built as a system that other nations—emerging powers—could join. And join they have. The past 25 years have seen the rapid rise of the Global South and Asia—most prominently, China—as major economic powers in their own right. We created the G20—with Canadian leadership, I might add. Russia was invited into the G7, making it the G8, in 1998 and into the WTO in 2012. China has been a WTO member since 2001.
In Latin America, in the Caribbean, in Africa and in Asia, developing countries have joined these institutions and accepted their rules; and that has delivered ever-higher living standards to their people.
But although this was and remains a broadly positive evolution, with extraordinary gains in terms of reducing extreme poverty, lengthening life spans and decreasing infant mortality, one assumption about this global shift turned out to be wrong.
This was the idea that as authoritarian countries joined the global economy and grew rich, they would inevitably adopt Western political freedoms too. That has not always happened. Indeed, in recent years, some democracies have even gone in the other direction and slid into authoritarianism—notably and sadly Venezuela. And some countries that had embarked on the difficult journey from communism to democratic capitalism have moved backwards. The saddest example for me is Russia.
Even China, whose economic success in lifting hundreds of millions of people out of poverty is one of the great accomplishments of recent times, stands as a rebuke to our belief in the inevitability of liberal democracy.
And within the club of wealthy Western democracies, we’re seeing homegrown anti-democratic movements on the rise. Whether comprising neo-Nazis, white supremacists, “incels,” nativists or radical anti-globalists, such movements seek to undermine democracy from within.
Liberal democracy is also under assault from abroad. Authoritarian regimes are actively seeking to undermine us with sophisticated, well-financed propaganda and espionage operations. They seek to suborn smaller countries, those wavering between democracy and authoritarianism.
The idea that democracy could falter, or be overturned in places where it had previously flourished, may seem outlandish.
But other great civilizations have risen—and then fallen. It is hubris to think we will inevitably be different. Our prime minister likes to say, about our country, that Canada didn’t happen by accident, and it won’t continue without effort. The same can be said of democracy itself.
Let’s set aside the malevolent actors for a moment. Why are our liberal democracies vulnerable at home?
Here’s why. Angry populism thrives where the middle class is hollowed out. Where people are losing ground and losing hope—even as those at the very top are doing better than ever.
When people feel their economic future is in jeopardy, when they believe their children have fewer opportunities than they had in their youth, that’s when people are vulnerable to the demagogue who scapegoats the outsider, the other—whether an immigrant at home or a foreign actor.
The fact is, middle-class working families aren’t wrong to feel left behind. Median wages have been stagnating; jobs are becoming more precarious, pensions uncertain; housing, childcare and education harder to afford.
These are the wrenching human consequences—the growing pains, if you will—of the great transformative forces of the past 40 years: the technology revolution and globalization. Of the two, technology is having the greatest impact. But even free-traders like me need to recognize that globalization has contributed as well.
So what’s the answer? I think we are agreed that it is not, as the Luddites unsuccessfully proposed at the start of the Industrial Revolution, to stop the march of technology. We all love our smartphones too much!
When it comes to trade, we need to introduce labour standards with real teeth, as Canada and the EU have done in our free trade agreement and as we [Canada, the United States and Mexico] are discussing as part of our ongoing modernization negotiations for NAFTA. It is long past time to bring the WTO up to date with the realities of 2018 and beyond. We need to seriously address non-tariff barriers to trade and forced technology transfers.
However, and overwhelmingly, the chief answer to the legitimate grievances of the middle class lies in domestic policy. The middle class and people working hard to join it need the security that comes from education in your youth, health care for your family, good jobs for your children, and dignity in your retirement. We need to think about what the jobs of the future for our citizens will be and ensure that those jobs will pay a living wage and that our people will have the skills to do them. Perhaps most importantly—and this is work that would benefit from international cooperation—we need to ensure that in a 21st century in which capital is global but social welfare is national, each of our countries has the durable tax base necessary to support the 99%.
But setting our own house in order is just one part of the struggle. The truth is that authoritarianism is on the march—and it is time for liberal democracy to fight back. To do that, we need to raise our game.
One device strongmen use to justify their rule is the Soviet trick of “whataboutism”—the strategy of false equivalency that holds that because democracies are inevitably imperfect they lack the moral authority to criticize authoritarian regimes. We heard this species of cynical rhetoric, for example, from the Venezuelan foreign minister at the Organization of American States meeting in Washington just last week. We must be smart enough to see through it.
It is possible, indeed necessary, for liberal democrats to acknowledge that our democracies aren’t perfect. The record of my own country’s relationship with Indigenous peoples, for instance, is one of tragic failure.
But admitting our mistakes doesn’t discredit us. On the contrary, it is one of the things that make us who we are.
Authoritarianism is also often justified as a more efficient way of getting things done. No messy contested elections, no wrenching shift from one short-termist governing party to another, no troublesome judicial oversight, no time-consuming public consultation. How much more effective, the apologists argue, for a paramount leader with a long-term vision, unlimited power and permanent tenure to rule.
We need to resist this corrosive nonsense. We need to summon Yeats’ oft-cited “passionate intensity” in the fight for liberal democracy and the international rules-based order that supports it.
Remember those great words at Gettysburg: “government of the people, by the people, for the people, shall not perish from the Earth.”
Preserving Lincoln’s vision means striking back. It means resisting foreign efforts to hijack our democracies through cyber-meddling and propaganda. It means outshining the other models and encouraging those who are on the fence.
And it means governing with integrity. Facts matter. Truth matters. Competence and honesty, among elected leaders and in our public services, matter.
Now I’d like to speak directly to Canada’s American friends and to my own many friends here in this room.
Let me begin by simply saying thank you.
For the past 70 years and more, America has been the leader of the free world. We Canadians have been proud to stand at your side and to have your back.
As your closest friend, ally and neighbour, we also understand that many Americans today are no longer certain that the rules-based international order—of which you were the principal architect and for which you wrote the biggest cheques—still benefits America.
We see this most plainly in the U.S. administration’s tariffs on Canadian steel and aluminum imposed under a 232 national security provision.
We share the world’s longest undefended border. Our soldiers have fought and died alongside yours in the First World War, in the Second World War, in Korea, in Afghanistan and in Iraq. The idea that we could pose a national security threat to you is more than absurd: it is hurtful.
The 232 tariffs introduced by the United States are illegal under WTO and NAFTA rules. They are protectionism, pure and simple. They are not a response to unfair actions by other countries that put American industry at a disadvantage.
They are a naked example of the United States putting its thumb on the scale, in violation of the very rules it helped to write.
Canada has no choice but to retaliate—with a measured, perfectly reciprocal, dollar-for-dollar response—and we will do so. We act in close collaboration with our like-minded partners in the EU and Mexico. They too are your allies, and they share our astonishment and our resolve.
No one will benefit from this beggar-thy-neighbor dispute. The price will be paid, in part, by American consumers and by American businesses.
The price will also be paid by those who believe that a rules-based system is something worth preserving. Since the end of the Second World War, we have built a system that promoted prosperity and prevented smaller and regional conflicts from turning into total wars. We’ve built a system that championed freedom and democracy over authoritarianism and oppression. Canada, for one, is going to stand up in defence of that system when that system is under attack. We will not escalate—and we will not back down.
We remember a time when the United States believed great international projects like the Marshall Plan or the reconstruction of Japan were the pathway to lasting peace, when America believed that its security and prosperity were bolstered by the security and prosperity of other nations—indeed, that America could only be truly safe and prosperous when its allies were too.
This vision—the Greatest Generation’s vision—was crucially dependent on the rules-based international order and the postwar institutions built to maintain it. It was based upon the willingness of all, especially the strongest, to play by the rules and be bound by them. It depended on the greatest countries of the world giving up, collectively, on the idea that might made right.
Now, the Second World War was 70 years ago. It is reasonable to ask whether our grandparents’ hard-won wisdom still applies today. I am certain that it does and for some new reasons.
After the devastation of the Second World War, the United States was the unquestioned colossus, accounting alone for half of the world’s economy.
Today, the U.S. economy stands at just under a quarter of the world’s. Together, the EU, Canada and Japan, your allies in the G7 and those beyond account for just a little bit more. China produces nearly 20% of the world’s GDP, and in our lifetimes its economy is set to become the world’s largest.
Now, that is not necessarily a bad thing. Americans, Canadians and Europeans are much wealthier and healthier and live longer than our grandparents did.
The rise of the rest has been a chapter in the story of our own increased prosperity. And it is only natural that the 85% of people who live outside the rich, industrialized West should over time account for a greater and growing share of the world’s wealth.
But that shift leaves the Western liberal democracies with a dilemma. How shall we behave in a world we no longer dominate?
One answer is to give up on the rules-based international order, to give up on the Western alliance and to seek to survive in a Metternichian world defined not by common values, mutually agreed-upon rules and shared prosperity, but rather by a ruthless struggle between great powers governed solely by the narrow, short-term and mercantilist pursuit of self-interest.
Canada could never thrive in such a world. But you, still the world’s largest economy, may be tempted.
That, of course, is your sovereign right. But allow me, as your friend, to make the case that America’s security, amid the inexorable rise of the rest, lies in doubling down on an improved rules-based international order. It lies in fighting alongside traditional allies, like Canada, and alongside all of the younger democracies around the world—from the Americas to Africa to Asia to the former Soviet Union—who are so keen to join us and who yearn for leadership.
You may feel today that your size allows you to go mano-a-mano with your traditional adversaries and be guaranteed to win. But if history tells us one thing, it is that no one nation’s pre-eminence is eternal.
That is why the far wiser path—and the more enduring one—is to strengthen our existing alliance of liberal democracies. To hold the door open to new friends, to countries that have their own troubled past, such as Tunisia, Senegal, Indonesia, Mexico, Botswana, Chile or Romania. To reform and renew the rules-based international order that we have built together. And in so doing to require that all states, whether democratic or not, play by common rules.
This is the difficult truth: as the West’s relative might inevitably declines, now is the time when, more than ever, we must set aside the idea that might is right. Now is the time for us to plant our flag on the rule of law—so that the rising powers are induced to play by these rules, too.
To explain our faith in you, let me remind you of the city on the hill Ronald Reagan evoked in his farewell speech in 1989.
It was “a tall, proud city built on rocks stronger than oceans, wind-swept, God-blessed, and teeming with people of all kinds living in harmony and peace; a city with free ports that hummed with commerce and creativity. And if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get here.”
This city—open to trade, open to immigrants—speaks to Canada’s values too. Indeed, these are the values of liberal democracy. These values are under attack from outside our walls. Most corrosively, even inside the Shining City, some have begun to doubt them. My country, Canada, believes in these values. We are ready to defend them and the rules-based international order that unites all of the world’s cities on the hill.
Our friends among the world’s democracies—in Europe, in Asia, in Africa and here in the Americas—are shoulder-to-shoulder with us. We all know we will be strongest with America in our ranks—and indeed in the lead. But whatever this great country’s choice will turn out to be, let me be clear that Canada knows where it stands and we will rise to the challenge.
Thank you.
IMF. June 13, 2018. Introductory Remarks at Foreign Policy’s Diplomat of the Year Award
By Christine Lagarde, IMF Managing Director
Washington - Good evening. I would like to thank Jonathan Tepperman for the kind introduction, and thank you to Foreign Policy for inviting me to this wonderful event, at a time when diplomacy is more important than ever.
It is a great honor to join you all this evening to celebrate an outstanding leader and public servant, the recipient of this year’s Diplomat of the Year award: Chrystia Freeland.
In many ways, Chrystia’s approach to international relations is what we imagine diplomacy can be at its best.
It is about weaving together multiple threads—from politics, to culture, to economics—to make global challenges more manageable. It is also about fostering global prosperity by building on sound domestic policies.
As Chrystia once put it: “ The world abroad and the world at home are not two solitudes. They are connected .” [1]
Indeed, the world can take inspiration from Canada’s leadership on key issues such as economic inequality, climate change, and women’s economic empowerment.
But if there is one defining issue in this moment, it is the future of the rules-based international system, especially when it comes to trade.
We know that Chrystia’s work—her incredible energy and resolve—were instrumental in achieving a historic trade agreement between Canada and the European Union.
And we know that so much more is to be done—not just in resolving the current trade disagreements but in creating a better global trade system.
For trade to be better, it needs to be more inclusive. It also needs to be more internationally cooperative to ensure a level playing field for all countries. And we can see that the future of trade is digital, and more services-based. Trade agreements will need to reflect these factors—and that will require diplomacy.
Of course, Chrystia has been a true champion of international cooperation, drawing strength from an approach that has underpinned Canada’s prosperity and standing in the world.
In addition to being a member of the G7, Canada was instrumental in creating the IMF, the World Bank, the General Agreement on Tariffs and Trade, and the G20.
In other words, Chrystia has multilateralism in her DNA .
But that is not the only thing that gives her strength. Hers is a career that is built on intellectual honesty and relentless curiosity.
Chrystia was able to nurture these qualities as a Harvard student and Rhodes scholar; and she then put them to work as a member of the fourth estate.
Her work at the Financial Times, the Globe and Mail, and Thomson Reuters left her with a deep understanding of international relations and a global network of contacts and friends. All the while she was able to count on her wonderful family—her biggest source of strength.
After a distinguished career in journalism, Chrystia said ‘yes’ to Justin Trudeau, who persuaded her to come back to Canada and run for office. That was five years ago.
Chrystia has since proven herself as a passionate and highly effective public servant —from her time as a Member of Parliament, to her work as Minister of International Trade, to her current post as Minister of Foreign Affairs.
The great thing about my friend Chrystia is that she has not lost her journalistic ethos along the way. She is constantly listening and learning, trying to get to the truth, and trying to get it right.
So, we are fortunate to have Chrystia in our corner as we encourage all countries to work together in a spirit of openness and honesty.
Her wisdom, her patience, and her grace under pressure make the impossible suddenly become possible. And, after all, that truly is the art of diplomacy.
So Chrystia—thank you for making a difference in our world through your incredible commitment and energy.
You embody the values that underpin this award. You inspire the next generation of leaders—in Canada and across the globe.
The Globe and Mail. 14 Jun 2018. Republican Senators vow to renew push against tariffs. Freeland condemns levies as ‘protectionism’ in Washington trip to rally opposition
ADRIAN MORROW, WASHINGTON
GREG KEENAN, TORONTO
It’s an abuse of presidential authority to use the 232. I am looking to have a vote and take action, and so we’re beginning to think of other ways.
BOB CORKER, TENNESSEE SENATOR
NICHOLAS KAMM/ASSOCIATED PRESS
Chrystia Freeland, right, stands with IMF managing director Christine Lagarde, left, and Foreign Policy’s editor-in-chief Jonathan Tepperman in Washington on Wednesday.
A bloc of Republican senators is vowing to push forward with an attempt to lift President Donald Trump’s tariffs on Canadian steel and aluminum and end a mounting trade war between the United States and its northern neighbour.
The pledge came on Wednesday as Foreign Affairs Minister Chrystia Freeland led a full-court press to rally opposition to the tariffs in the U.S. capital and find a way forward in deadlocked North American freetrade agreement negotiations.
Ms. Freeland met with the Senate foreign relations committee, whose chairman has been leading congressional efforts to stop Mr. Trump’s tariffs. She was scheduled to speak with Robert Lighthizer, the President’s trade chief and NAFTA point-man, on Thursday. Ms. Freeland condemned the tariffs in some of her strongest language to date, calling them “protectionism, pure and simple” and warning that the United States was attacking the liberal international order it has led since the end of the Second World War. “The idea that we could pose a national security threat to you is more than absurd – it is hurtful,” Ms. Freeland told a dinner held by Foreign Policy magazine, which gave her its diplomat of the year award at a Washington hotel on Wednesday evening. “They are a naked example of the United States putting its thumb on the scale, in violation of the very rules it helped to write.”
Finance Minister Bill Morneau, meanwhile, sat down with Treasury Secretary Steve Mnuchin, who is said to favour a quick resolution on NAFTA. And Flavio Volpe, the head of Canada’s auto parts industry lobby, met with the staff of Mr. Trump’s economic adviser.
Mr. Trump imposed tariffs of 25 per cent on steel and 10 per cent on aluminum imported from Canada, Mexico and the European Union this month. The President used Section 232, an obscure trade rule that allows him to impose levies for “national security” reasons.
Bob Corker, a Tennessee Republican who last week tabled legislation that would give Congress the ability to stop Mr. Trump from bringing in national security tariffs, invited Ms. Freeland to the committee.
Mr. Corker’s initial attempt to bring the legislation forward as an amendment to an unrelated bill appears to have floundered as Republican leaders refuse to bring it to a vote for fear of angering the President. But on Wednesday, Mr. Corker said he was determined to try again.
“It’s an abuse of presidential authority to use the 232,” he said after emerging from the afternoon meeting with Ms. Freeland in the U.S. Capitol. “I am looking to have a vote and take action, and so we’re beginning to think of other ways.”
Mr. Trump’s tariffs touched off a trade war, with Canada vowing equivalent tariffs on American goods starting next month, and drove bilateral relations to a historic low, with Mr. Trump and his aides unleashing a string of personal insults on Prime Minister Justin Trudeau last weekend.
The United States is using the tariffs as leverage in NAFTA talks, demanding that Canada and Mexico agree to a revised trade pact – with new protectionist measures benefiting the United States – as a condition of having the levies lifted.
Arizona Senator Jeff Flake, also a Republican, said his party was solidly behind Canada and had to find a way to get a vote on Mr. Corker’s legislation. “I know that the majority of Republicans feel this way, agree with us on tariffs,” he said.
Democrat Bob Menendez said he told Ms. Freeland that Americans do not agree with Mr.
Trump’s actions and that it was wrong for the United States to
“give the back of your hand to some of your closest allies.”
Meanwhile, one lobby group called Republicans Fighting Tariffs launched an ad campaign on
Fox News declaring the levies a
“tax on Americans” and calling on viewers to sign a petition demanding Senate Majority Leader
Mitch McConnell bring Mr. Corker’s bill to a vote. “These tariffs are terrible for our businesses, for your communities, for our workers and for our economy,” an announcer says over images of factories.
NAFTA talks have been deadlocked over U.S. demands for a “sunset clause” that would terminate the deal in five years unless all three countries agree to extend it, and the abolition of Chapter 19, a dispute-resolution process Canada has successfully used to challenge U.S. tariffs on softwood lumber. Canada has said it will not agree to either proposal.
Mr. Volpe, who met with representatives of Mr. Trump’s key economic adviser Larry Kudlow in Washington on Wednesday, said Mr. Kudlow’s staff told him that Canada, the United States and Mexico are close to agreeing on new automotive content rules – one of the toughest parts of the NAFTA talks.
He said U.S. officials assured him the two countries will weather the current rough patch in Canada-U.S. trade relations. But he said he got “no indication of when we pick back up” on negotiations.
Antonio Ortiz-Mena, a former Mexican trade official who helped negotiate the original NAFTA, said Canada and Mexico have worked hard to get to a deal and it was up to the United States to show flexibility to break the logjam.
“I do believe that if the U.S. maintains impossible demands, it will be impossible to reach a deal. I don’t think there’s bluffing going on here,” he said in a trade roundtable at Washington consultancy Albright Stonebridge Group last week.
Ms. Freeland’s visit is part of Canada’s chief trade strategy of putting pressure on the administration directly as well as mobilizing trade-loving Americans to push the White House to change course.
Saskatchewan Premier Scott Moe, who visited Washington last week to meet with White House officials and members of Congress, said the main message is that the United States is hurting itself with the trade fight. He used the example of a piece of slab steel manufactured by the Evraz plant in Regina: The steel is shipped to Oregon to be turned into a plate, then to Alberta to be formed into oil and gas pipeline, then shipped back to the United States.
“We have product waiting on the docks in Western Canada. We have projects in Oklahoma and Texas that are ready to go, waiting for their product and it’s not arriving because they’re trying to figure out who’s going to pay this tariff,” he said in an interview at his Washington hotel. “Who is impacted by that? The U.S. economy. They are not getting this infrastructure built.”
The Globe and Mail. JUNE 14, 2018. NAFTA negotiators aim to make deal this summer, Foreign Minister Freeland says
ADRIAN MORROW
Foreign Minister Chrystia Freeland says NAFTA negotiators will “make a real push over the summer” to get a deal, following a meeting with U.S. Trade Representative Robert Lighthizer.
The sitdown came the morning after Ms. Freeland attacked the Trump administration’s tariffs on Canadian steel and aluminium in her toughest language to date and tied President Donald Trump’s protectionism to the mounting authoritarian populism that is threatening the international liberal democratic order.
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Canadian Minister of Foreign Affairs Chrystia Freeland speaks after receiving the 2018 Foreign Policy's Diplomat of the Year award on Wednesday, June 13, 2018, in Washington.
JOSE LUIS MAGANA/THE CANADIAN PRESS
Ms. Freeland said the details on the negotiations – such as when and where the next meetings will be held – had not yet been worked out.
North American free-trade agreement talks have been log-jammed for weeks, with Canada insisting it will never agree to U.S. demands to abolish Chapter 19, one the deal’s dispute-resolution provisions, and insert a sunset clause that would automatically terminate NAFTA in five years unless all three countries agree to extend it. Also on the table are tougher automotive content requirements demanded by the United States to move manufacturing jobs out of Mexico, Canada’s protectionist supply-management system for dairy and a U.S. proposal to limit Canadian and Mexican companies from bidding on American government contracts.
Mr. Trump cranked up the pressure on Canada and Mexico to get a deal earlier this month, announcing tariffs on their metals that he will not lift until they agree to reform NAFTA.
Ms. Freeland said Thursday she told Mr. Lighthizer that Canada will go ahead with its plan to retaliate with equivalent tariffs on $16.6-billion worth of U.S. goods, from steel and aluminum to orange juice and bourbon.
“The Canadian strategy on the tariffs … will continue to be that we will not escalate, and we also will not back down,” she said.
Ms. Freeland said she also gave Mr. Lighthizer a copy of her speech to a Foreign Policy dinner Wednesday evening, where the magazine presented her with its diplomat of the year award.
“He was very gracious and he congratulated me, both over the phone and today,” Ms. Freeland said.
That speech described Mr. Trump’s tariffs as “absurd” and “hurtful,” and a “naked example of the United States putting its thumb on the scale, in violation of the very rules it helped to write.” Ms. Freeland used the address to warn the U.S. that its protectionist path could lead to the decline of its influence as a great power and called on the world’s democracies to fight back against authoritarian demagogues.
“Liberal democracy is under assault right now, and authoritarianism is on the march,” Ms. Freeland said Thursday when asked about her speech. “I believe very strongly that it is important for those of us who believe in liberal democracy – and I think that includes the overwhelming majority of Canadians – for us to strike back.”
And she said countries must do a better job of providing economic opportunities because those who are struggling financially are “vulnerable to … demagogues who scapegoat immigrants at home, or foreign trading partners.”
The Globe and Mail. 14 Jun 2018. Will Senate members across the border cross their President on trade?
CAMPBELL CLARK, Columnist
The few vocal Trump critics in the Republican ranks in Congress spoke up against the U.S. President’s feud with Canada. Senator Jeff Flake asked the key question: Will the other Republicans who disagree with the President be willing to cross him?
There was, as Foreign Affairs Minister Chrystia Freeland met members of the Senate foreign relations committee in Washington, an unusual chorus of Canada-backers. Republicans and Democrats trooped out to oppose Mr. Trump’s tariffs on steel and aluminum and to criticize the President’s treatment of Canada.
But named one by one, it turns out they were habitual Trump detractors: Senator Robert Menendez, a New Jersey Democrat accustomed to opposing the President, and Senators Flake and Bob Corker, Mr. Trump’s two most vocal Republican critics – neither of whom, tellingly, is running for reelection.
What matters will be how much pressure Mr. Trump feels from his political allies – whether they can, or will, persuade the President to get trade talks back on track.
That was the mission that sent Ms. Freeland to Washington. She’s there often now for NAFTA talks, but this trip was aimed at finding a way to get past the unprecedented feud that had the President calling Prime Minister Justin Trudeau “dishonest and weak.” Finance Minister Bill Morneau went, too, to meet Treasury Secretary Steve Mnuchin, a trade supporter in the Trump administration.
It helps Canada to have allies in the United States. And it’s fairly rare that any three senators of any description bother to speak up about Canada in any context. But Mr. Trump is most likely to be moved by his own allies.
Mr. Flake said most Republican senators think, like him, that Mr. Trump is misusing s. 232 of the Trade Expansion Act, which allows the president to apply tariffs on foreign goods on national security grounds. Mr. Corker has proposed a bill to rein in Mr. Trump’s power – trade is under the jurisdiction of Congress under the U.S. Constitution – but the Republican leadership doesn’t want it to go to a vote.
“I know that a majority of Republicans feel this way – agree with us on tariffs. Whether or not we can get a vote to the floor, that’s the question,” Mr. Flake said. “A lot of our colleagues don’t want to cross the President.”
There’s reason for them to fear. Mr. Trump’s approval ratings are sky high among Republican voters. Some Republican members of Congress have faced challenges in congressional primaries for not being supportive enough of Mr. Trump. South Carolina Representative Mark Sanford, a Trump critic, was defeated in a primary Tuesday. Those two vocal Republican critics, Mr. Flake and Mr. Corker, aren’t running for re-election.
Mr. Corker’s bill to rein in use of s. 232 tariffs is an inside-baseball matter on Capitol Hill, but the sentiment behind it might move senators to press Mr. Trump, at least in private – not just that the President is messing with trade, but that he’s picking a strange Canadian target.
“I don’t know of any senator that hasn’t expressed concern about what has happened, and just sort of the random nature of what’s happened,” Mr. Corker told reporters. A few other Republicans have publicly expressed more gentle concern with Mr. Trump’s recent Canada fixation, such as Utah Senator Orrin Hatch, South Dakota Senator Mike Rounds, and Maine Senator Susan Collins.
Some inside the Canadian government don’t see Mr. Trump’s feud with Canada as being completely random; they see it as tactics in NAFTA negotiations. Whether Mr. Trump’s weekend blasts at Mr. Trudeau, and his aides’ follow-up on Sunday TV, were purely motivated by anger or by pressure tactics is up for debate, but there’s no doubt Mr. Trump has sought to apply public pressure on Canada and Mexico to make concessions in trade talks. And Pennsylvania Republican Senator Pat Toomey told a local radio station that Mr. Trump called him from Singapore on Sunday to tell him he needed to keep the tariffs on Canada to apply leverage in NAFTA talks, according to Politico.
The question is whether Republicans are willing to tell their own President the leverage tactics have gone too far.
The Globe and Mail. 14 Jun 2018. Business voices tariff concerns. Honda Canada CEO says auto levies would be devastating for manufacturers
JAMES BRADSHAW
JUSTIN GIOVANNETTI
GREG KEENAN
STEVEN CHASE
My job personally, is to protect every single job in Ontario … I have to protect the auto workers, which is a massive industry, and my priority is to make sure we protect the steel and aluminum workers.
DOUG FORD ONTARIO PREMIER-DESIGNATE
Fears about the negative impact of a Canada-U.S. trade war are reaching into the corner offices of some of Canada’s biggest and most prominent companies.
Royal Bank of Canada chief executive Dave McKay expressed deep frustration with the acrimonious tone trade talks have taken on recently.
“I’m troubled by how events have spiralled to where they are today,” the head of Canada’s largest bank told reporters on Wednesday, after an event for investors.
Mr. McKay said that during a recent two-day trip to Washington, he heard U.S. officials “talking negatively about Canada without fact.” That can’t help but make businesses pause when considering investment or expansion into cross-border markets, he said.
His comments came after a weekend when U.S. officials denigrated Prime Minister Justin Trudeau and President Donald Trump threatened that a U.S. investigation into auto imports will lead to tariffs on vehicles and auto parts shipped out of Canada to the United States.
Tariffs on autos would be “potentially devastating for the Canadian manufacturers,” Honda Canada Inc. president Dave Gardner said, in the first public comment by the head of an auto maker in Canada on the possible impact of a 25-per-cent tariff on Canadian vehicle exports.
Honda assembles its Civic sedan and CR-V crossover utility vehicle at a plant in Alliston, Ont., that employs about 4,000 people. It ships about 75 per cent of those vehicles to the U.S. market.
“We think all Canadian stakeholders should be focused on what needs to be done to avert the possibility [of tariffs],” Mr. Gardner said in an e-mail.
Ontario premier-designate Doug Ford met with Canadian auto and steel industry executives Wednesday and discussed the economic damage such tariffs would do to Ontario, which is the home of all vehicle assembly plants in Canada and about 85 per cent of the 130,000 jobs in assembly and parts manufacturing.
The concerns about the impact of the trade war on Canada and Ontario – as the centre of steel and auto making in the country – arise as the province prepares for its first change of government in 15 years, with power shifting from the Liberals to Mr. Ford and his Progressive Conservatives.
Quebec has offered $100-million in loans and guarantees to steel and aluminum manufacturers in that province, but Mr. Ford did not make a similar commitment during a news conference after his meeting with the auto and steel industry leaders.
“My job personally, is to protect every single job in Ontario … I have to protect the auto workers, which is a massive industry, and my priority is to make sure we protect the steel and aluminum workers,” he said, adding that he will work with federal officials to resolve what he called a “NAFTA war.”
RBC’s Mr. McKay said he supports the federal government’s refusal to cave in to U.S. demands in negotiations on a new North American free-trade agreement, such as a “sunset clause” that would require an automatic review of any deal every five years.
“The government’s absolutely right in saying this is not on,” Mr. McKay told reporters. “You can’t go through that every five years if people are making 10-year investments in capital on both sides of the border. So you have to stand firm on those issues.”
RBC is a major commercial lender on both sides of the border, and has a top-10 U.S. investment bank based in New York that serves companies in sectors ranging from energy and health care to retail and technology. The U.S. footprint is key to RBC’s growth, especially since 2015, when RBC spent $7.1-billion to buy Los Angeles-based City National Bank – a successful commercial lender with an expanding loan portfolio worth US$32billion.
“I think we’re all concerned,” Mr. McKay said. “Any businessman’s going to pause, right? If you’re on the cusp of signing to build a plant in Canada or to make an investment, and you need access to foreign markets to sell that product, you’re going to obviously say, ‘Okay, is there going to be a tariff on that? And [do] my economics still work?’ ”
The Quebec government’s loans and loan guarantees to small steel and aluminum producers could trigger a U.S. subsidy complaint from the Americans, trade lawyers have warned.
Steel makers in Canada said they believe Canadian governments should be willing to help steel workers and companies as long as the assistance doesn’t contravene international trade rules set by such bodies as the World Trade Organization (WTO).
“As the situation evolves, where governments can take appropriate WTO-compliant steps to assist workers and companies unfairly harmed by these measures, we believe there should be a willingness to assist,” Joseph Galimberti, president of the Canadian Steel Producers Association, said in a statement.
The Globe and Mail. 14 Jun 2018. Dairy just a drop in the bucket for trade, but it has soured the debate on both sides of the border. Parkinson: It’s clear now Trudeau can’t back down on dairy issue
DAVID PARKINSON, Columnist
The political capital at play in the dairy dispute, on both sides, far outweighs the near-inconsequential economics involved.
Given how puny the dairy industry is in the grander scheme of Canada-U.S. trade, the tempest-in-a-milk-jug over Canada’s dairy tariffs defies economic logic. Frankly, the political logic is messed up, too – on both sides of the border.
Suddenly, Canada’s system of quotas and tariffs on imports of U.S. dairy products has become the biggest public target of President Donald Trump’s hostility over the Canada-U.S. trade relationship.
It is, by Mr. Trump’s own account, the reason he has slapped tariffs on Canadian steel and aluminum ($16-billion in exports to the United States last year). He keeps bringing it up while rattling his sabre about possible tariffs on the Canadian auto sector (more than $80-billion).
Indeed, based on the President’s level of vitriol, dairy now looms as a major obstacle to reaching a deal on a renegotiated NAFTA. The North American free-trade agreement defining a $900-billion-a-year trade partnership hangs in the balance.
And what portion of that is dairy trade? About $500-million. That’s million, with an M. Less than one-10th of 1 per cent of Canada-U.S. two-way trade.
Yes, obviously, it could be a lot bigger. Both countries are undeniably protectionist in their dairy industries, providing subsidies to farmers and restricting market access.
Arguably, dairy farmers in both countries could benefit substantially from a NAFTA deal that loosens the border, even if only partly.
Still, it defies economic logic that this could become a pivotal issue in one of the world’s biggest trade relationships. Surely this shouldn’t be what we’re talking about, at this stage in the NAFTA negotiations, and in the current environment where big trade files such as autos and steel and aluminum and lumber are in dispute.
Yet, the political capital at play in the dairy dispute, on both sides, far outweighs the near-inconsequential economics involved.
For Mr. Trump, the dairy industry is large in states such as Wisconsin and Pennsylvania – states the President won by the thinnest of margins in the 2016 election, thanks to substantial support in rural areas. The President owes his victory in no small part to those swing states, and he can ill afford to lose their support.
But let’s remember just how small the dairy vote really is. In the United States, there are about 40,000 dairy farms, the vast majority of which are family-owned. Even when you include spouses and other adult family members, this is a remarkably tiny constituency of voters the President is loudly defending in international trade talks.
Is Mr. Trump really willing to lob a tariff grenade into, say, the auto sector – the most deeply integrated industry on the continent – for the sake of securing a minuscule victory that will play well to a modest segment of his party’s rural support base?
The answer, given the demonstrated unpredictability of this U.S. President, is “quite possibly.”
But what’s perhaps even harder to understand is how the Canadian leadership, the supposedly more rational side in this negotiation, has painted itself into a corner in the name of defending its own dairy constituency, which amounts to just 11,000 dairy farms.
Prime Minister Justin Trudeau promised in his 2015 election campaign to defend the dairy industry’s supply-management system in trade negotiations – a system that both protects domestic pricing and restricts foreign competition for Canadian dairy farmers. He and his government have repeated that pledge numerous times since then, including in the past week, as it has come under Mr. Trump’s verbal assault. This despite the smallness of the industry and its role in Canada-U.S. trade, and the clearly protectionist nature of Canada’s existing dairy import rules.
It makes almost as little political and economic sense for Canada to go to the wall on defending its dairy system as it does for the United States to focus its attack on the sector.
Nevertheless, it’s pretty clear that Mr. Trudeau can’t back down on this issue now; to do so would be a public capitulation to Mr. Trump’s bully tactics. That would deal the Prime Minister a much bigger political blow than can be measured by the size of the dairy vote.
It’s hard to see now how Canada could ever accept a loosening of cross-border dairy trade barriers as part of a new NAFTA. Mr. Trump has made that a political non-starter by taking his frustrations public.
Maybe, if cooler heads prevail, there’s room for the two sides to agree to future bilateral talks on dairy, outside of a formal NAFTA pact. It is, after all, a reasonable goal for both countries to seek to expand markets for their dairy industries.
But before that can happen, the rhetoric has to come down to earth. The significance of the dairy file has to return to some sense of proportion.
REUTERS. JUNE 14, 2018. Canada says agreed with U.S. to keep NAFTA alive, no talks set
David Ljunggren
(Reuters) - Canada agreed with the United States on Thursday that slow-moving talks to update NAFTA should continue although they did not set a date for the next round, a senior official said in remarks casting further doubt on the chances of a deal this year.
Negotiations to modernize the North American Free Trade Agreement started last August and were initially scheduled to finish by the end of December.
That deadline has been extended several times as Canada and Mexico struggle to accommodate far-reaching U.S. demands for change such as a sunset clause that would allow one nation to pull out after five years. Canada and Mexico reject the idea.
U.S. officials had already made clear time was running out to secure a deal the current Congress could vote on. Democrats - who tend to be less enthusiastic about free trade than Republicans - are expected to make gains in midterm elections in November which could make passing a new NAFTA harder.
“We decided ... to continue our negotiations on NAFTA,” Canadian Foreign Minister Chrystia Freeland said in Washington after she met U.S. Trade Representative Robert Lighthizer.
“We will be working hard over the summer,” she said in remarks shown on Canadian television. “We didn’t set specific dates today. We talked about following up on setting up specific dates for meetings and that is what we are going to do.”
Although Lighthizer had initially pressed for a quick deal to avoid conflicting with a Mexican presidential election on July 1, Freeland said the three nations agreed they could continue the talks.
A Mexican source familiar with the negotiating process said officials were working to set up a fresh ministerial meeting soon after the election in Mexico.
Contentious issues were still unresolved and there was no situation visible in which Mexico would accept “for example, the sunset clause”, the source said.
Negotiating teams were still engaged in technical work and were on standby. “Nobody is depressed,” the source said.
Another challenge is the tariffs the United States imposed this month on Canadian and Mexican aluminum and steel.
Freeland said she had told Lighthizer Canada was resolute in its commitment to slapping retaliatory tariffs on U.S. goods on July 1. “We will not escalate and we will also not back down,” she said.
Additional reporting by Ana Isabel Martinez in Mexico City; Editing by Chizu Nomiyama and Nick Zieminski
CETA
The Globe and Mail. REUTERS. JUNE 14, 2018. Italy won’t ratify EU free-trade agreement with Canada, agriculture minister says
FRANCESCA LANDINI, MILAN
Italy will not ratify the European Union’s free trade agreement with Canada, its new agriculture minister said on Thursday, ratcheting up an international trade spat and potentially scuppering the EU’s biggest accord in years.
The Comprehensive Economic and Trade Agreement (CETA) is the first major trade deal the European Union has signed since it began implementing its South Korea agreement in 2011.
All 28 EU member states must approve the agreement for it to take full effect.
In an interview with daily La Stampa, Minister Gian Marco Centinaio said the Italian government would ask the parliament not to ratify the treaty since it does not ensure sufficient protection for the country’s speciality foods.
“We will not ratify the free-trade treaty with Canada because it protects only a small part of our PDO (Protected Designation of Origin) and PGI (Protected Geographical Indication) products,” Centinaio told the newspaper.
“Doubts over this agreement are shared by many of my European colleagues.”
The European Commission said it was working closely with EU members to ensure that the trade accord was mutually beneficial.
Canadian Foreign Minister Chrystia Freeland told reporters in Washington: “I’m confident we will have full ratification in the end, and the important thing is this agreement has entered into force as an economic matter.”
Of the 28 European Union countries, Italy has the most food products with PDO and PGI labels, including Parmigiano Reggiano cheese and Prosciutto di Parma ham. Under CETA, Canada has recognized more than 40 Italian PDO and PGI labels out of a total of 292 for the food-obsessed country.
‘WRONG AND RISKY’
Coldiretti, the influential association of Italian agricultural companies, backed Centinaio’s intention, saying in a statement CETA was “wrong and risky” for Italy.
It said Italian food exports, equal to 41 billion euros last year, could triple with a serious fight against international food counterfeiting.
The treaty entered into force on a provisional basis in September 2017, sweeping away tariffs on a large number of goods and widening access to Canadian beef in Europe and EU cheese and wine in Canada.
Its supporters say it would increase trade between the partners by 20 percent and boost the EU economy by 12 billion euros ($14 billion) a year and Canada’s by C$12 billion ($9 billion).
Some farm associations and critics in European states have expressed concerns about the threat of rapidly rising pork and beef imports from Canada. Coldiretti also mentioned risks posed by the annulment of duties on Canadian wheat, a country where the herbicide glyphosate can be used.
Centinaio belongs to the far-right League party and is considered close to its leader and Deputy Prime Minister Matteo Salvini. Salvini is emerging as the pivot in the new government that the League formed this month with the anti-establishment 5-Star Movement.
The minister was not immediately available to comment on the interview and it was not possible to get a reaction from the office of the prime minister on the issue.
The government program that forms the basis of the League-5-Star coalition mentioned CETA, saying the executive would oppose “the aspects (of the treaty) that imply an excessive weakening of the protection of citizens’ rights.”
The government’s program also pledged to “protect the highest-quality products of Made in Italy.”
Italy’s challenge to CETA comes after U.S. President Donald Trump backed out of a joint communique agreed by Group of Seven leaders in Canada at the weekend that mentioned the need for “free, fair and mutually beneficial” trade and the importance of fighting protectionism.
The United States has imposed tariffs on steel and aluminum imports from Canada, Mexico and the European Union and is weighing up the possibility of slapping additional duties on automobile imports.
Trump says his tariffs are meant to protect U.S. industry and workers from unfair international competition as part of his “America First” agenda.
CANADA - ARGENTINA
Natural Resources Canada. June 14, 2018. Canada and Argentina Announce Cooperation in the Areas of Energy and Mining at G20
Bariloche, Argentina — Canada and Argentina continue to demonstrate global leadership collaboration to achieve our climate change goals and enable the transition to a low-carbon economy.
Canada’s Minister of Natural Resources, the Honourable Jim Carr, and Juan José Aranguren, Argentina’s Minister of Energy and Mines, today agreed to combine their countries’ expertise to deliver clean energy solutions for the future.
The ministers signed three Memoranda of Understanding (MoU) — one each on energy efficiency, mining policy, and nuclear energy cooperation — at the G20 Energy Transitions Ministerial Meeting in Argentina. The MoUs demonstrate that the two countries:
- place a high priority on energy efficiency as a means to reduce energy use and costs and achieve our climate goals;
- share a commitment to sustainable mineral resource development, which will result in economic growth and environmental stewardship; and
- continue to work toward a bilateral framework for collaboration on nuclear energy projects, research and development, and policies aimed at the sustainable development of nuclear energy.
The G20 Energy Transitions Ministerial Meeting, under the Argentine leadership, focuses on transitions to more flexible, transparent and cleaner energy systems, as well as affordable access to energy. Work under the Ministerial complements Canada’s G7 Presidency theme of working together on climate change, oceans and clean energy.
Canada has demonstrated a strong commitment, both domestically and internationally, to a clean energy future. Through Canada’s national energy dialogue, Generation Energy, Canadians expressed that Canada has an opportunity to play a leadership role in the global transition to a low-carbon economy while ensuring that industry remains competitive. Canada will continue to support clean energy initiatives that create jobs, support investment and strengthen industry competitiveness to advance Canada’s clean future and help us realize our global climate change goals.
Argentina is fully committed to its energy and climate goals and is eager to fulfil its international agreements. Ensuring energy security for a developing country as well as mitigating environmental impacts are critical issues for the Argentinean energy policy.
Quotes
“Major breakthroughs that truly accelerate our transition to a low-carbon economy can only come from collaboration. These agreements demonstrate that by leveraging our expertise and advancing energy cooperation we will move closer to meeting our climate change commitments and position Canada to be a leader in the clean growth economy.”
- Jim Carr, Canada’s Minister of Natural Resources
“These agreements confirmed Argentina´s interest to enhance international collaboration in key areas. We ratified our commitment to mitigate climate change aligned with the Paris Agreement’s goals. We pursue a sustainable energy and mining development together with a policy of energy savings and efficiency that allows us to take care of our natural resources and those of the planet”.
- Juan José Aranguren, Argentinean Minister of Energy and Mining
FULL DOCUMENT: https://www.canada.ca/en/natural-resources-canada/news/2018/06/canada-and-argentina-announce-cooperation-in-the-areas-of-energy-and-mining-at-g20.html
Natural Resources Canada. June 14, 2018. Canada and Argentina to Undergo Peer Reviews of Inefficient Fossil Fuel Subsidies
Bariloche, Argentina - Canada and Argentina continue to demonstrate leadership, domestically and internationally, in the transition to a low-carbon economy.
The Honourable Jim Carr, Canada’s Minister of Natural Resources, along with Argentina’s Energy and Mining Minister, the Honourable Juan José Aranguren, today announced that Canada and Argentina will conduct peer reviews to ensure both countries are on track to phase out inefficient fossil fuel subsidies. They made the announcement on the margins of the G20 Energy Transitions Ministerial Meeting in Bariloche, Argentina.
In 2016, Canada committed to phasing out inefficient fossil fuel subsidies by 2025, strengthening the landmark 2009 commitment made by G20 countries to phase out and rationalize inefficient fossil fuel subsidies over the medium term while providing targeted support for the poorest citizens. Argentina and Canada have both made significant progress in phasing out inefficient fossil fuel subsidies and are on track to achieve their commitments.
Phasing out inefficient fossil fuel subsidies is an important step in the transition to a low-carbon economy. Canada is taking action to combat climate change by pricing carbon pollution, phasing out traditional coal-fired power and regulating methane emissions from the oil and gas sector. By conducting a peer review of its inefficient fossil fuel subsidies, Canada is further reaffirming its commitment to climate action and to sustainable economic growth at home and abroad. The Minister of Finance and the Minister of Environment and Climate Change will be conducting the peer review on behalf of Canada.
Argentina is fully committed to its energy and climate goals and is eager to fulfil its international agreements. Ensuring energy security for developing countries while mitigating environmental impacts remain central components of Argentinean energy policy.
Through Canada’s national energy dialogue, Generation Energy, Canadians expressed that Canada has an opportunity to play a leading role in the global low-carbon movement. Canada will continue to support clean energy initiatives that create jobs, support investment and strengthen industry competitiveness to advance Canada’s clean growth future.
Quotes
“Canada’s partnership with Argentina in this peer review demonstrates our commitment to ambitious climate and energy policies. Transforming how we make and use energy presents huge economic opportunities for Canada and will result in good middle class jobs for Canadians and a cleaner planet for future generations.”
- Jim Carr, Canada’s Minister of Natural Resources
“On the path to a low-carbon economy, Canada is a world leader. This peer review supports the commitment we made to our G20 partners to phase out inefficient fossil fuel subsidies and is another important step in the Government’s plan to invest in clean growth that helps create jobs for the middle class.”
- Bill Morneau, Canada’s Minister of Finance
“The environment and the economy go together, and Canada is in the midst of an essential transition to a cleaner, more sustainable future. That’s why our government is taking action to reduce carbon pollution, protect the environment and drive clean growth. Phasing out inefficient fossil fuel subsidies by 2025 remains a priority for our government, and we are pleased to undertake a peer review with Argentina on our efforts as we work to meet that commitment.”
- Catherine McKenna, Canada’s Minister of Environment and Climate Change
“The peer review with Canada contributes to make subsidies more efficient and direct them to those who really need it. Likewise, we aim to diversify our energy matrix by adding more renewable energies, a source of employment and development for all the country, and our global contribution to reduce greenhouse emissions.
“The subject of inefficient fossil fuels subsidies that encourage wasteful consumption has been on the G20 Agenda since 2009. These subsidies distort energy markets, place a strain on public budgets, reduce our energy security, impede investment in clean energy sources and undermine efforts to deal with the threat of climate change.
“As a G20 country, Argentina reaffirms its commitment to rationalize and phase out, over the medium term, inefficient fossil fuel subsidies that encourage wasteful consumption, recognizing the need to support the poor, and we will endeavour to make further progress in moving forward on this commitment. One big progress is this joint peer review, which we will be undertaking with Canada, the country that this year holds the Presidency of the G7. This will help us to enhance our energy security, mitigate climate change and keep our focus on those people who really need subsidies.”
Juan José Aranguren, Argentinean Minister of Energy and Mining
FULL DOCUMENT: https://www.canada.ca/en/natural-resources-canada/news/2018/06/canada-and-argentina-to-undergo-peer-reviews-of-inefficient-fossil-fuel-subsidies.html
CPTPP
Global Affairs Canada. June 14, 2018. Minister Champagne introduces implementing legislation for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership
Ottawa, Ontario - The Government of Canada is committed to diversifying and expanding market access opportunities that will help Canadian businesses grow and create job opportunities for hard-working Canadians.
Today, the Honourable Francois-Philippe Champagne, Minister of International Trade, introduced legislation in the House of Commons for the implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
The CPTPP will provide Canadian exporters and investors across a broad range of sectors with preferential access to fast-growing markets in the Asia-Pacific region, including Japan, Malaysia and Vietnam. The CPTPP also contains the first-ever chapter devoted to small and medium-sized businesses, making it easier for them to export, grow their companies and create good middle-class jobs.
The CPTPP will set a new standard for free trade agreements in the Asia-Pacific region by including robust and enforceable provisions in areas such as labour and the environment. The Agreement will enter into force 60 days after at least six of the partner countries complete their respective ratification procedures.
Quotes
“The momentum of our progressive trade agenda continues with this next important step on CPTPP. We negotiated the best deal for Canadians from coast to coast to coast, and this Agreement will benefit industries across Canada—from beef and barley to forestry products, seafood, manufacturing and services. The Government of Canada continues to increase access to new markets so that Canadian businesses and exporters across this great country can prosper today and in the future.”
- François-Philippe Champagne, Minister of International Trade
Quick facts
- The CPTPP represents a trading bloc of 11 countries, with almost 500 million people and a combined GDP of $13.5 trillion, or 13.5% of global GDP.
- In 2017, Canada’s merchandise trade with the 10 other CPTPP countries amounted to more than $95 billion.
- The CPTPP was signed on March 8, 2018, in Santiago, Chile.
- Once it enters into force for Canada, the CPTPP is expected to boost Canada's GDP by $4.2 billion.
- The CPTPP, along with NAFTA and free trade agreements with the European Union (Comprehensive Economic and Trade Agreement) and South Korea, will make Canada the only G7 nation with free trade access to the Americas, Europe and the Asia-Pacific region.
FULL DOCUMENT: https://www.canada.ca/en/global-affairs/news/2018/06/minister-champagne-introduces-implementing-legislation-for-the-comprehensive-and-progressive-agreement-for-trans-pacific-partnership.html
ASEAN
Global Affairs Canada. 2018-06-13. 50th ASEAN Economic Ministers’ Meeting
The Honourable François-Philippe Champagne, Minister of International Trade, will attend the 50th ASEAN Economic Ministers’ Meeting in Singapore between August 30 and September 2, 2018.
FINANCE
Department of Finance Canada. 2018-06-13. Finance Minister visits Washington, D.C.
Minister of Finance Bill Morneau will visit Washington, D.C. on Wednesday, June 13, 2018. The Minister will attend meetings during the day, and attend Foreign Policy's Diplomat of the Year Award ceremony. The Minister will attend the Foreign Policy's Diplomat of the Year Award ceremony.
Department of Finance Canada. June 13, 2018. Minister Morneau Announces Appointments to the Royal Canadian Mint Board of Directors
Ottawa, Ontario – The Government of Canada is committed to an open, transparent and merit-based selection process for Governor in Council appointments—one that will 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 appointments of Ms. Fiona L. Macdonald, Dr. Sandip K. Lalli and Dr. Gilles Patry to the Board of Directors of the Royal Canadian Mint. These appointments are for four years.
Ms. Macdonald serves as an Independent Director on the Board of GMP Capital, and is Chair of its Management Resources and Compensation Committee, as well as a member of its Audit Committee and Governance and Nominating Committee. She is also a Director at the BC Ferry Authority and the Chair of the BC Chapter of the Institute of Corporate Directors.
Dr. Lalli currently serves as the President and Chief Executive Officer of the Calgary Chamber of Commerce. She is a veteran business strategist and senior executive professional with multifaceted experience as both an independent entrepreneur and an executive in international corporations in the agriculture, financial markets, and oil and gas industries.
Dr. Patry is the Executive Director of the U15 Group of Canadian Research Universities and the former President and Chief Executive Officer of the Canada Foundation for Innovation. Dr. Patry also served as President and Vice-Chancellor of the University of Ottawa.
Biographical Notes
Ms. Fiona L. Macdonald
Ms. Fiona L. Macdonald has had a successful career in professional services, building industry-leading consulting practices in Canada and the U.S. She is also a recognized expert in executive compensation.
She is an Independent Director on the Board of GMP Capital, and is Chair of the Management Resources and Compensation Committee, as well as member of both its Audit, and Governance and Nominating Committees. She is also a Director at the BC Ferry Authority.
She is the Chair of the BC Chapter of the Institute of Corporate Directors and is an accredited director with the ICD.D designation.
With over 28 years in consulting, Ms. Macdonald has worked with hundreds of companies in a wide range of industries. She has extensive experience in boardrooms, and in negotiations. She also has experience as a corporate and commercial banker.
Ms. Macdonald holds a BA in International Relations and an MBA from the University of British Columbia, and is a member of the Institute of Corporate Directors.
Ms. Macdonald is currently based in Vancouver, BC.
Dr. Sandip K. Lalli, FCPA, ICD.D
Dr. Sandip Lalli is currently the President and Chief Executive Officer of the Calgary Chamber of Commerce. Her global career has taken her from Alberta to Singapore and many other countries along the way.
She has been called upon to identify opportunities for growth and assess business risk. Known for her communication skills and visionary leadership, she has led in the face of adversity and seeming impossibility. International corporations have entrusted her with strategic planning and execution for some of their most important initiatives.
She has a firm belief that making a contribution to society is fundamental, and that the contribution she can make to society is rooted in a practical business sense: a belief that a contribution to a strong economy equates to a better quality of life for everyone.
For Cargill Incorporated—the largest global, privately held company providing food, agriculture, financial and industrial products and services to the world—she steered the financial management from High River, Alberta to operations in the United States, and advised colleagues in Brazil, Honduras, England, Switzerland, Belgium, the Netherlands, Russia, Singapore, India, Papua New Guinea and Mexico.
Dr. Lalli holds an Institute of Corporate Directors (ICD.D) designation, a Doctorate in Business Administration and a Master's degree, and is a Fellow Chartered Professional Accountant.
Dr. Gilles Patry
Dr. Gilles Patry is Executive Director of the U15 Group of Canadian Research Universities, a collective of Canada's leading research-intensive universities designed to foster the development and delivery of long-term, sustainable higher education and research policy, in Canada and around the world.
Dr. Patry holds a B.A.Sc. and M.A.Sc. in civil engineering from the University of Ottawa, and a Ph.D. from the University of California, Davis.
From 2010 to 2017, he was President and CEO of the Canada Foundation for Innovation, an independent corporation created by the Government of Canada to fund research infrastructure at universities, colleges and research hospitals. From 1993 to 2008, he successively served as Dean of Engineering, Vice-President (Academic), and President and Vice-Chancellor of the University of Ottawa. He began his career in 1971 as an environmental engineering consultant, before becoming professor of civil engineering, a position he held for 15 years, first at École Polytechnique de Montréal and later at McMaster University in Hamilton, Ontario.
He has received honorary doctorates from the University of Waterloo, McMaster University, the University of Lyon and Western University.
Dr. Patry is a Member of the Order of Canada, a recipient of the Order of Ontario and a Fellow of the Canadian Academy of Engineering. He was named Executive of the Year in 2004 by the Regroupement des gens d'affaires de la Capitale nationale. In 2009, he was named Chevalier de l'Ordre de la Pléiade by the Assemblée parlementaire de la Francophonie.
Quotes
"I wish to congratulate the candidates on their successful appointments to the Board of Directors of the Royal Canadian Mint. Their diverse backgrounds and extensive experience will be an asset to the Board, and I wish them great success in these new roles."
- Bill Morneau, Minister of Finance
Quick facts
- The Royal Canadian Mint is the Crown corporation responsible for the minting and distribution of Canada's circulation coins.
- The Mint is recognized as one of the largest and most versatile mints in the world, offering a wide range of specialized, high quality coinage products and related services on an international scale.
Royal Canadian Mint: https://www.mint.ca/store/template/home.jsp
StatCan. 2018-06-14. National balance sheet and financial flow accounts, first quarter 2018
- National wealth: $10.8 trillion; First quarter 2018; 0.6% increase (quarterly change)
- National net worth: $11.4 trillion; First quarter 2018; 1.6% increase (quarterly change)
- Source(s): Table 36-10-0580-01: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3610058001
National net worth increases for the third consecutive quarter
National net worth, the sum of national wealth and Canada's net foreign asset position, increased 1.6% to $11,375.9 billion at the end of the first quarter, primarily due to the strength of Canada's international investment position. On a per capita basis, national net worth increased from $302,986 in the fourth quarter to $307,036.
Canada's net foreign asset position rose by $110.1 billion to a record $544.2 billion in the first quarter, a second consecutive quarterly increase. This growth reflected the upward revaluation effect (+$104.2 billion) of a depreciating Canadian dollar against major foreign currencies. At the end of the first quarter, 97% of Canada's international assets were denominated in foreign currencies, compared with 40% of Canada's international liabilities.
National wealth, the value of non-financial assets in the Canadian economy, rose 0.6% to $10,831.7 billion at the end of the first quarter, a deceleration from the 1.3% growth in the fourth quarter of 2017.
Chart 1: Changes in national net worth
Household sector net worth edges down
Net worth of the household sector edged down 0.2% in the first quarter to $10,892.0 billion, the first decrease since the third quarter of 2015. Sluggish growth in the value of non-financial assets (+0.2%) and a $27.2 billion decrease in the value of financial assets contributed to the decline.
Among financial assets, equity and investment funds posted the largest decline (-$26.5 billion), while household residential real estate continued the weaker growth (+0.3%) that began in 2017.
On the other side of the ledger, financial liabilities edged up 0.3% in the quarter as household borrowing slowed. Consequently, the ratio of debt to total assets edged up to 16.6%.
Chart 2: Household sector leverage: Debt to assets
Household borrowing moderates
On a seasonally adjusted basis, households borrowed $22.2 billion in the first quarter, down from $25.4 billion in the previous quarter. Mortgage borrowing decreased $2.0 billion to $13.7 billion, the lowest level since the second quarter of 2014. This mirrored the 17.0% decrease in the value of residential resale activity in the first quarter, coinciding with the introduction of new mortgage regulations and higher interest rates.
Total household credit market debt (consumer credit, and mortgage and non-mortgage loans) totalled $2,134.3 billion in the first quarter. Credit market debt as a proportion of household disposable income (adjusted to exclude pension entitlements) decreased from 169.7% in the fourth quarter to 168.0%, as disposable income increased at a faster rate (+1.3%) than credit market debt (+0.3%). In other words, there was $1.68 in credit market debt for every dollar of household disposable income. Mortgage debt reached $1,402.1 billion, while consumer credit stood at $627.5 billion.
The seasonally adjusted household debt service ratio, measured as total obligated payments of principal and interest as a proportion of household disposable income for mortgage and non-mortgage debt, remained relatively flat at 13.9% in the first quarter. Meanwhile, mortgage interest payments (+3.7%) continued to outpace mortgage principal payments (-0.2%).
Chart 3: Household mortgage interest and obligated principal payments
Federal government demand for funds continues to decline
The federal government reduced overall liabilities in the quarter. This decline was spurred by $9.7 billion of net retirements of short-term paper, which more than offset $2.7 billion in net bond issuances. The ratio of federal government net debt (book value) to gross domestic product (GDP) edged up to 28.9%.
The demand for funds by other levels of governments was $8.5 billion, driven by net issuances of bonds and debentures (+$9.0 billion). The ratio of other government net debt (book value) to gross domestic product GDP totalled 27.8%.
Demand for funds by non-financial private corporations levels off
The demand for funds by non-financial private corporations was $17.1 billion in the first quarter. This was a return to lower levels after strong mergers and acquisitions activity and other borrowing in the first half of 2017.
The value of financial liabilities and equity of non-financial private corporations declined $127.6 billion over the quarter. This change was mainly from the other changes in assets account, which measures changes in the value of assets and liabilities due to asset price changes. Similarly, changes in asset prices caused non-financial private corporations' financial assets to decrease by $42.4 billion, while non-financial assets increased by $28.2 billion. The result was an overall improvement in the net worth of the non-financial private corporations sector.
Chart 4: Borrowing by private non-financial corporations
Financial sector bond issuance leads increase in supply of funds
The financial sector provided $38.2 billion of funds to the economy through financial market instruments in the first quarter, up from $23.6 billion in the fourth quarter. This was mostly attributable to bonds (+$41.6 billion).
The value of financial assets of financial corporations decreased by $72.3 billion to $13,790.3 billion at the end of the first quarter. Downward revaluations of $92.4 billion contributed to the lower value of financial assets, led by equity and debt securities.
Chart 5: Economic transactions and other changes to financial corporations' assets
FULL DOCUMENT: https://www150.statcan.gc.ca/n1/en/daily-quotidien/180614/dq180614a-eng.pdf?st=q-v6JXnG
POPULATION
StatCan. 2018-06-14. Canada's population estimates, first quarter 2018
- Quarterly population estimate — Canada: 37,067,011; April 1, 2018; 0.3% increase (quarterly change)
- Source(s): Table 17-10-0009-01: https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=1710000901
Canada's population passes the 37-million mark
According to preliminary estimates, Canada's population was 37,067,011 on April 1, 2018. It took two years and two months for the Canadian population to go from 36 million to more than 37 million. This was the shortest length of time ever observed for an increase of this magnitude. In the first quarter, Canada's population growth rate was 0.3%, up 103,157 compared with January 1, 2018.
International migration is the main source of population growth
From January 1 to April 1, 2018, international migratory increase was 88,120, the highest level ever for a first quarter. Canada received 79,951 immigrants, while the number of non-permanent residents rose by 22,283. The increase in the number of non-permanent residents was attributable to an increase in the number of work permit holders and refugee claimants.
Natural increase in the first quarter was 15,037, or the difference between 93,944 births and 78,907 deaths. Natural increase reached historic lows according to preliminary data, primarily because Canada had never recorded so many deaths in a single quarter. In addition, there are generally fewer births during this time of the year.
Population grows everywhere except in Newfoundland and Labrador
The population grew in every province and territory in the first quarter, with the exception of Newfoundland and Labrador (-0.3%). Nunavut (+0.7%), Ontario and Alberta (+0.4% each) had higher population growth rates than Canada's (+0.3%). Alberta returned to the positive side in its migratory exchanges with other provinces and territories in the last three quarters, following two consecutive years of losses. The province had interprovincial migration gains of 1,862 in the first three months of the year.
Population estimates, quarterly1 2 3 4
Frequency: Quarterly
Table: 17-10-0009-01 (formerly CANSIM 051-0005)
Geography: Canada, Province or territory
FULL DOCUMENT: https://www150.statcan.gc.ca/n1/en/daily-quotidien/180614/dq180614c-eng.pdf?st=blQxaRU8
INTERNATIONAL TRADE
EDC. June 14, 2018. WEEKLY COMMENTARY. Who’s winning the emerging market growth race? Is the developed-market revival leaving the emerging world behind?
Peter Hall, Vice-President and Chief Economist
Global growth is accelerating. After years of disappointment, where forecasters seemed to be regularly revising their growth predictions downward, suddenly a flip-flop: projections are now regularly being revised upward, starting with the developed world. And after all the post-recession accolades that were piled on to emerging markets just a few years ago, they seem to be taking a bit of a back seat in current economic banter. Is the emerging world reviving too, and if so, which are the leaders?
Emerging markets in the aftermath of the Great Recession
First, a little context. In the aftermath of the Great Recession, key emerging markets joined – and some led – the avalanche of public stimulus, unleashed in an effort to save the planet from a massive economic collapse. Their need to maintain stability was likely more acute than that of the developed world, as their systems were calibrated to an expectation of very aggressive growth. A sudden interruption would have been too politically risky, disrupting the general population and the businesses that sustain it. As such, in many emerging market cases, stimulus was a far greater share of GDP than for the developed world. Governments who couldn’t or wouldn’t pay up suffered the consequences, with some seeing outright regime change.
For those who spent the big bucks, it worked well – almost too well – but the big problem then became choosing when to turn the taps off. In certain key cases, notably China, they are still trying to ease back. Clearly, for many emerging economies, superior post-recession growth was a bit of a mirage, one that is now giving way to a sustainable reality, thanks to the pickup in global activity. So, who are the leaders in this renewed race?
What are GDP data saying?
Recent GDP figures seem to put India in the lead. Success with reforms dulled growth temporarily in 2017 as the economy absorbed the one-off impacts, but most analysts see sustainable annual growth above 7 per cent. As it weans itself off public stimulus, China is also outperforming expectations. First-quarter growth surprised on the upside at an annualized 6.8 per cent, sparking upward revisions for the year. Vietnam remains red-hot, ringing in at the upper-6-per-cent level, along with the Philippines. The Asian tiger economies are doing well, although growth is not as hot. Industrialized Asian growth rates look more like those on the upper end of the developed markets.
Eastern European economies seemed to collectively have a good year in 2017 following years of sluggish post-recession growth. Recent success is likely due to Western Europe’s 2017 revival. As growth is carrying forward into 2018, Eastern European economies should benefit again. However, growth there is quite a bit behind the hot growth zones in Asia.
Latin America is lagging the rest, likely held back by Brazil’s economic and political woes, and not helped by Venezuela’s troubles. Even so, there are bright spots in Central America, and Peru is consistently generating impressive growth well above the regional average. The Middle East and Africa are generally soft, with very occasional bright spots.
There is cause for optimism in emerging markets in more recent figures. Purchasing managers across the emerging world are indicating an improvement in their perception of market conditions in the coming six months, trailing the very positive upturn in the developed world, but clearly moving in the right direction. Singapore, a regional bellwether, is showing a solid increase in total-economy buyer sentiment, sparked by the largest and most steady increase in new orders in the past seven years. China has also seen a notable improvement in sentiment.
Trade indicators, a tell-tale sign of progression
Over the coming months, trade indicators are the likely tell-tale statistic of progress. It’s the flow of trade, lifted by the developed world, that’s giving rise to recent emerging market activity. The engine economies are doing their jobs. But two key factors could be disruptors: first, the rise in protectionist uncertainty, now being stoked by concrete anti-trade policies; and second, the tightening of liquidity, which is beginning to impact financial market stability in the more exposed emerging markets. We will be watching these very carefully in the coming weeks and months.
The bottom line?
Emerging market growth is following the lead of the developed world. Revived growth is spreading, and optimism is building in a way we have not seen for a number of years. Given the presence of significant pent-up demand in OECD nations, the pick-up in emerging market growth is likely to last.
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LGCJ.:
