NAFTA renegotiation (and other trade issues) #2
This is a continuation of the topic NAFTA renegotiation.
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Reading about horrific pollution in Florida, I vaguely remembered that Canadian sugar was disadvantaged in NAFTA.
Following is from Canadian sugar website, so take with grain of (sugar?), but geez, sure makes Trump fixation on Cdn dairy sound a little hypocritical?
(Sugar beets are grown in s Alberta. I assume raw material for Cdn cane sugar is imported.)
International Trade: NAFTA
...The NAFTA was implemented in 1994 and provided for gradual free trade in sugar between the United States and Mexico. In fact, Mexico achieved full duty-free access to the U.S. in 2008. Canada was excluded from the NAFTA sugar agreement so Canadian sugar exports continue to be limited to one-tenth of one percent (0.1%) of the 10.5 million tonne U.S. sugar market. Canada also faces quota limitations on a wide range of sugar-containing products while Mexico's access has been unlimited since 2003. U.S. quotas will remain fixed for Canada’s sugar industry unless multilateral or significant regional negotiations result in comprehensive market access gains across all products.
Unlike Canada’s free market sugar policy, the U.S. government intervenes in its sugar market to support domestic production of cane and beet sugar. The policy artificially supports U.S. domestic sugar prices above world and Canadian price levels, restricts imports and uses a special “re-export program” to encourage exports of sugar and sugar-containing products...
U.S. to impose anti-dumping duties of 24% plus on Canadian-made pipes
The Canadian Press | Aug 21, 2018
U.S. penalties range from 3.45% for Turkey to over 132% for China.
...The U.S. is to immediately begin collecting 24.38 per cent cash deposits on imports from Canada that were worth almost US$180 million in 2017, the U.S. Department of Commerce announced on Tuesday.
The other countries being hit with duties are China, Greece, India, Korea, and Turkey, with penalties ranging from 3.45 per cent for Turkey to more than 132 per cent for China.
India is the only country on the list that had greater exports of the pipe to the U.S. in 2017 than Canada, at $295 million US.
..."The United States has a $2-billion surplus in steel trade with Canada," said Adam Austen (spokesperson for Foreign Affairs Minister Chrystia Freeland) in an email. "Canada buys more steel from the U.S. than any other country, accounting for more than 50 per cent of U.S. exports."
The U.S. Commerce Department said it found that the six countries have sold pipe at less than fair value in the United States.
...Last week, Trump said the U.S. should harvest fallen trees from the forest floor, which he says are making wildfires in California worse, rather than import wood when "Canada is charging us a lot of money to bring their timber down into our country."
U.S.-Mexico trade deal welcomed - but industry players want details
Peter Zimonjic |Aug 27, 2018
Auto industry says Monday's announcement shows progress - but questions raised about textiles
While the trade deal U.S. President Donald Trump's administration struck with Mexico has the potential to set the stage for the final phase of NAFTA negotiations, many of the details have yet to be fully revealed, leaving industry players cautious in their reaction to the news.
For some, there are visible potential benefits, while for others the uncertainty and lack of detail have raised concerns that their industry may still be under threat.
The automobile industry in Canada, for instance, appears to be broadly supportive
The deal, as announced, would require 40-45 per cent of auto content made in Mexico to be made by workers earning at least $16 US per hour, placating unions in Canada and the U.S. concerned about high-paying jobs moving to Mexico's low-wage economy
...The revised U.S.-Mexico deal will require 75 per cent of auto content to be made in North America, up from 62.5 per cent under the current NAFTA deal.
But Flavio Volpe, president of Canada's Automotive Parts Manufacturers' Association, said that despite the increase to the rules of origin threshold, some companies may simply continue to buy parts from abroad and just eat the 2.5 per cent tariff. Still, he called the deal "progress."
...The textile industry, however, said it has concerns with what it has heard about the deal so far, specifically the potential that sewing thread, pocket fabric, elastic bands and coated fabric would also have to meet North American rules of origin.
...Fruit and vegetables
Ron Bonnett, president of the Canadian Federation of Agriculture, said noted that other issues, such as dispute settlement, remain unresolved.
He said while the announcement of U.S.-Mexico deal may make a splash, he is still waiting to see what it will mean for agriculture in Canada.
The Canadian Produce Marketing Association, however, said it was encouraged by the agreement and by outgoing Mexican President Enrique Peña Nieto's reference to including Canada in future discussions.
"It is our understanding that the seasonality provision has been removed from the U.S.-Mexico agreement and will not be part of the discussions moving forward," the CPMA said in a statement. "The CPMA has long advocated for the removal of the seasonality provision and is pleased that it will not be a feature of a future trilateral agreement."
That provision would have allowed U.S. produce suppliers to make a claim of anti-dumping against Mexican producers when it shipped large amounts of produce into the U.S. at certain times of the year.
The US-Mexico trade deal may be bad news for China
Yen Nee Lee | 8/28/2018
The trade deal with Mexico offers U.S. President Donald Trump "some wins from a political perspective that the administration can point to ahead of the mid-terms," said John Woods, the chief investment officer for Asia Pacific at Credit Suisse.
That could mean the country's ongoing dispute with China may drag on, Woods said.
..."There is, right now, no visible interest from the US administration in pursuing talks with China over trade, and there will likely not be either unless China proposes some far-reaching changes to issues such as intellectual property protection and forced technology transfer," the economists wrote.
That means the additional $200 billion in U.S. tariffs on Chinese goods will likely come into effect in September, they all said. China will also likely retaliate to the extent that they can and worsen the dispute, they added.
But the deal with Mexico showed that the U.S. "is willing to concede" if the terms are right, which is a "good signal" to countries trying to negotiate with the Trump administration, said Juan Carlos Hartasanchez, senior director of Albright Stonebridge Group.
Those countries could also learn from Mexico how to move from "a very complicated negotiation where no progress was being attained" to what "seems to be a good resolution for both parties"...
The National Corn Growers Association indicates "prices have dropped by 44 cents a bushel... Under the plan to bailout farmers hurt by tariffs, corn growers will receive payments at a rate of a penny per bushel"
John G. Murphy @JGodiasMurphy (US Chamber of Commerce)
7:56 PM - 28 Aug 2018
And Trump was exercised about Canada's protection of a few dairy farmers!
The devil's details--using national security rationale to bludgeon allies, at expense of consumers:
U.S.-Mexico trade deal may allow Trump to put tariffs of up to 25% on Mexican auto imports
David Shepardson and Ana Isabel Martinez | Aug 28, 2018
...a previously unreported side agreement between the two countries would allow the United States to pursue “national security” tariffs on annual Mexican car and SUV imports of over 2.4 million vehicles. The side deal would allow national security levies on auto parts imports above a value of $90 billion per year on the same grounds. The administration plans to announce the results of a probe into whether autos and part imports pose a national security risk in the coming weeks.
The study could be used to justify 25 percent U.S. tariffs on automotive imports on the basis that protecting the U.S. auto industry is vital to national security under a Cold War-era trade law.
Automakers are concerned that the agreement signals the United States will proceed with national security tariffs – and are likely to use the tariffs to win concessions from the European Union and Japan as well. They have said the tariffs could cost hundreds of thousands of jobs and dramatically raise vehicle prices.
A separate side-agreement lays out a possible scenario in which the United States increases its normal “most-favored nation” tariffs on autos, currently 2.5 percent. A potential new, unspecified rate would be applied to vehicles that do not meet the existing or revamped NAFTA.
Mexico reserves the right to challenge the U.S. use of “national security” tariffs at the World Trade Organization, people briefed on the talks said.
...The deal also sets quotas for carmakers to use domestic steel and aluminum...
...Asian and German automakers, and automakers and suppliers that want to expand production in Mexico, could be at a disadvantage, and be forced to source more production of both vehicles and engines in the United States.
...could add hundreds of millions of dollars in (paperwork) costs to automakers over the next decade....
The new cap on total vehicle exports could spur a rush for companies to announce additional production capacity in Mexico in the coming months to try to “lock in” space under the cap before the agreement takes effect...
The new content rules and a new requirement that 40-45 percent of a vehicle be produced by workers earning $16 an hour or more, far higher than current Mexican rates, could lead automakers to try to raise vehicle prices...
Canada, U.S. resume NAFTA talks amid growing optimism
Julie Gordon, Sharay Angulo | Aug 29, 2018
WASHINGTON (Reuters) - Canada has three days to tackle contentious issues when it resumes talks with the United States on Wednesday to salvage the trilateral North American Free Trade Agreement amid signs Ottawa was open to taking a more conciliatory approach.
...(Canadian Foreign Minister Chrystia) Freeland said on Tuesday that Mexico’s concessions on auto rules of origin and labor rights was a breakthrough.
...Ottawa is also ready to make concessions on Canada’s protected dairy market in a bid to save a dispute-settlement system, The Globe and Mail reported late on Tuesday.
...One of the issues for Canada in the revised deal is the U.S. effort to dump the Chapter 19 dispute resolution mechanism that hinders the United States from pursuing anti-dumping and anti-subsidy (Mexican produce, Cdn lumber, Cdn Bombardier plane) cases. (U.S. Trade Representative Robert) Lighthizer said on Monday that Mexico had agreed to eliminate the mechanism.
To save that mechanism, Ottawa plans to change one rule that effectively blocked American farmers from exporting ultrafiltered milk, an ingredient in cheesemaking, to Canada, the Globe and Mail reported, citing sources. (But Trudeau said Tuesday he would defend dairy farmers.)
...Other hurdles include intellectual property rights and extensions of copyright protections to 75 years from 50, higher threshold than Canada has previously supported...
Quebec election: NAFTA talks positioned as a door for sovereignty
Christopher Curtis, Montreal Gazette | August 31, 2018
Québec solidaire's Manon Massé says the potential blow to the province's (dairy) farmers proves federalism isn't working for Quebecers
...Representatives from Quebec’s four major parties were in Longueuil Friday to meet with the province’s farming lobby and show a united front in favour of supply management.
...Quebec produces about 50 per cent of Canada’s dairy, and its agricultural sector is roughly the size of Ontario’s automotive industry. To oppose supply management would be political suicide, in other words. (120,000 jobs)
...(Parti Québécois Leader Jean-François) Lisée and (Québec solidaire's Manon) Massé’s poll numbers have them trailing the Liberals and Coalition Avenir Québec by a wide margin. And opinion surveys suggest Quebec sovereignty is less popular now than it has been in generations.
But Lisée has also suggested that the right set of external factors — like a blow to the dairy sector — could cause Quebecers to reconsider that stance.
The Art of the Deal...
Next week's NAFTA challenge: Restore momentum after Trump's latest 'bullying'
Janyce McGregor | Sep 01, 2018
U.S. President bragged about deal 'totally on our terms,' but Freeland isn't giving up
...Adam Taylor, a former advisor to Conservative trade minister Ed Fast who is now a consultant in Ottawa...Given Canada's reliance on U.S. trade, the idea of no deal being better than a bad deal for Canada is a "pick your poison" situation, he said. "You're going to die anyway." ...
Trying to reconcile Canadian affinity for arbitration clause of NAFTA, since it has benefited them (Bombardier planes? paper?) and hurt them (US investors in wind turbines) with Trump admin disdain for it--I assume so Trump can heavily intervene when US business complains (Boeing, US newsprint co.)? I suppose if Cdn dairy tariff lifted, US dairy could challenge requirement that milk be hormone-free
Is Donald Trump About to Become NAFTA’s Savior?
Jordan Weissmann | Aug 31, 2018
...Trump’s NAFTA would also roll back the parallel legal system that currently lets foreign corporations sue governments outside of traditional courts, known as Investor-State Dispute Settlement, or ISDS. This would be another major win for left-leaning trade critics, such as Sen. Elizabeth Warren, who made ISDS a centerpiece of her opposition to the Trans Pacific Partnership, and may be the most fundamental revision to the pact. ISDS, which has become a common feature of trade pacts globally, allows businesses to challenge governments before an arbitration panel if they believe their property has been illegally seized. But many have worried about companies using it to challenge basic health and environmental regulations. Philip Morris sought damages from Uruguay when the country sought to put graphic health warnings on cigarette packages, for instance (thankfully, it lost). According to Public Citizen’s Lori Wallach, who has been briefed on the specifics of the preliminary deal, the new NAFTA would eliminate the use of ISDS between the U.S. and Canada, and severely restrict its use in Mexico. The agreement does contain a carve-out for some energy companies, which would still get to use the old system. But “ISDS as it has ever been known for all intents and purposes is gone,” Wallach told me...
Just as an aside, I don't think most / many Canadians want to drink US milk. Our milk is growth hormone free and also antibiotic free. That is not true of US milk. https://bcdairy.ca/milk/articles/does-milk-contain-growth-hormones-and-antibiotics
As for the Canadian Government helping out Bombardier, yes it has, but the USA government has helped out Boeing to a much greater extent.
Personally, I'd rather no deal than a bad deal for Canada, and I suspect most Canadians feel the same way. As far as I can understand, the US congress would like a deal with Canada. Trump's a bully that does not understand much of anything.
Trump warns Congress to keep out of NAFTA talks with Canada
Murray Brewster | Sep 01, 2018
'There is no political necessity to keep Canada in the new NAFTA deal,' U.S. president tweets
...Trump also warned U.S. lawmakers, who have become increasingly uneasy that the new trade deal, formally signalled in a letter to Congress Friday, might not include Canada. The deal would then not be a reworked version of NAFTA, but a bilateral U.S.-Mexico trade deal.
"Congress should not interfere with these negotiations or I will simply terminate NAFTA entirely and we will be far better off..." Trump tweeted.
Both Republicans and Democrats have objected to a straight up bilateral deal with Mexico. Republican Senate Majority Whip John Cornyn was quoted by the American media on Wednesday saying that, without Canada, it would, "reduce the likelihood that it would actually be approved."
...Under NAFTA's withdrawal rules, Trump must give six months' notice to the leaders of Canada and Mexico, the other stakeholders in the current pact, for the U.S. to pull out. He also must seek the support of Congress to pass such a change...
Trump tweeted that VAT tax was unaccounted for in NAFTA. In Canada, I think it's called Good and Services Tax (fed) and is combined with any provincial sales taxes into Harmonized Sales Tax: http://www.insatax.com/news/june-2016-vat-rates-change-canada. Intent of GST was to ensure that imports and domestically produced goods were taxed at the same rate, as I recall. Many countries have VAT, but not US (for political reasons?)
It's a bit complicated to calculate because tax is applied at each transaction, then reconciled (some rebates) at the last transaction.
Cdn dairy farmer on subsidized over-prodution v. supply management:
Dismantling Canadian dairy protections won’t help U.S. farmers, group warns
Ben Cousins | September 1, 2018 5:26PM EDT
...Graham Lloyd, general manager of the Dairy Farmers of Ontario marketing group...believes the issue with the American dairy industry is that farmers produce more milk than necessary and rely too heavily on government subsidies to remain in operation.
“You look at what’s happening in the United States, Australia and New Zealand, they have failing farms, they don’t control production and so they have massive overproduction and that results in low prices and bankrupt farms,” Lloyd said.
Lloyd adds that overproduction among American dairy farms is so high that the problem can’t be resolved by entering the much smaller Canadian market.
“Why would Canada open up its market to the U.S.? It’s not going to benefit the U.S. economy, it’s not going to benefit the U.S. dairy, it’ll only cause harm to the Canadian dairy,” he said.
Instead of government money, the Canadian dairy industry relies on supply management, which ensures farmers are only producing enough milk to meet Canadian demand. Lloyd believes this system has kept Canadian farmers afloat while those in other countries feel the pinch....
Never mind Cdn dairy, I've seen binational "supply management" approach work pretty well in US and Canadian waters of Lake Erie. It has both protected the common resource and the incomes of Cdn commercial fishermen and Ohio charter boat operators:
Dairy farmers need supply management, in Canada and the United States
Jennifer Wells | Sept. 1, 2018
...So what’s it like to be a dairy farmer in the land of the free and the home of the brave?
For many dairy farmers the answer ranges from dire straits to crisis.
...There’s too much milk production. Milk surpluses are out of control. Past efforts to put controls in place have failed and failed again.
...Reaching back in time, prior to the signing of the U.S.-Canada Free Trade Agreement, we see the U.S. federal government paying dairy farmers to cut production. That didn’t work. Two years later marked the launch of the unpleasantly titled Dairy Termination Program of 1985 in which farmers were paid to dispose of — slaughter or export — dairy cows. That reduced the national head count of dairy cattle by 1.5 million at a cost of $1.8 billion (U.S.). Milk production increased.
Fast forward to the modern day. Take a look at New York State, where governor Andrew Cuomo extolled the growth of the dairy industry, prodded by tax credits and expansion financing. Milk production increases vastly outpaced the national average — 2.2 per cent in 2013 versus 0.4 per cent growth nationwide. The following year the governor crowed that the sector, so important to his economic growth plan, had reclaimed the number three spot in the rankings of the country’s milk production.
Everything rosy? Far from it. A Greek yogurt maker, wooed with $14 million in tax credits, lasted little more than two years. Over production has massively depressed milk prices. Operational efficiencies have increased: According to the U.S. Department of Agriculture, annual per cow milk production rose 12 per cent across a 10-year span to 23,000 pounds annually by 2017. This past spring, milk prices fell to a 10-year low.
Last month, Gov. Cuomo announced a $30-million fund to assist dairy farmers in converting their operations to non-dairy, but still agricultural, operations. There’s been a raft of bad news.
In June, Wisconsin Gov. Scott Walker announced the creation of a dairy task force to come up with actions that state can take to maintain a viable dairy industry...More than a dozen proposals were submitted to the Agri-Mark gathering. The phrase “supply management” came up a lot. Mark McAfee, executive director of the California Dairy Campaign, submitted a proposal for a Sustainable Milk Inventory System Act. It’s a 12-point plan built on establishing a national program of dairy inventory management. Sounds familiar. McAfee summarized the act as a “U.S. version of the Canadian system with improvements.”
Long term stability requires a structural overhaul. Lost in the call on this side of the border for an end to supply management are the voices in the U.S. dairy industry who see a similar program as the most effective way to protect the future of an industry...
Steel and aluminum tariffs for national security reasons may have strengthened Cdn resolve re Article 19 (dispute settlement).
Former Cdn Ambassador to US:
Canada must learn from our history and stand firm on NAFTA
Derek Burney* | September 2, 2018
...With negotiations hanging in the balance primarily over dispute settlement, the current situation is like déjà vu all over again as this was the issue that almost scuppered the initial free-trade negotiations in 1987...
The dispute settlement issue was vital then, and is now because we are dealing with an economic giant more than 10 times our size, one that tends to render decisions on trade that are arbitrary, capricious and contravene U.S. trade law. The panels act as a check on such actions obliging each party to adhere strictly to their own trade laws. The mechanism is not foolproof. Canada has won on several issues such as softwood lumber and labelling on meat, but even when we have won, the United States has used every pretext to avoid honouring the result. Significantly, the same mechanism was strengthened in NAFTA, emulated by the WTO and in other major trade agreements. It helps temper the raw power imbalance.
...If we have learned anything about the Trump administration’s actions on trade to date it is that we need independent adjudication of disputes now more than ever. The tariffs on Canadian steel and aluminum were implemented on spurious “national security” grounds. They are a prime example of egregious actions that should be challenged. If we can modify U.S. behaviour with other safeguards, notably against dubious national security claims, so be it. But we need the spectre of binding dispute settlement to give greater security of access and certainty to our exporters.
...When we are confronted with schoolyard bully tactics, the choice is clear. Concede and hope that the behaviour will improve, or resist in the hope that rational voices in Congress and business will constrain the President’s worst impulses. Remembering too, as George Schultz was fond of saying, “It is never over until it is over and, in Washington, it is never really over.” This is, however, time to stand firm.
* Derek Burney was Canada’s ambassador to the United States from 1989 to 1993. He led the Canadian delegation in concluding negotiations of the Canada-U.S. free-trade agreement.
Interesting--Canada gave some on supply management in CETA (Comprehensive Economic and Trade Agreement, Canada-Europe, but I seem to recall US entry was anticipated?) and TPP (Tran-Pacific Partnership, which Trump withdrew from). Latter was in response to US, but was left in after Trump pulled out--maybe in anticipation that U would be back? Canada now investing in dairy industry ("subsidy"?):
New TPP deal, same concessions for Canada’s supply managed sectors
Kelvin Heppner | January 23, 2018
The Canadian government has conceded the same access to the country’s dairy, poultry and egg markets in the new Trans-Pacific Partnership as was agreed to the initial version of the deal in 2015 when the U.S. was still part of the TPP.
Canada and the other 10 countries concluded negotiations on Tuesday for the updated Pacific trade pact, now formally known as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The signing ceremony for the deal will likely take place on March 8th in Chile.
The market access provisions in the text are unchanged from the first agreement, which gave TPP countries (including the U.S.) access to the following share of the domestic market:
3.25 percent for dairy
2.3 percent for eggs
2.1 percent for chicken
2 percent for turkey, and
1.5 percent for broiler hatching eggs.
Supply managed producer groups are questioning why Canada agreed to the same terms when the largest economy in the original deal — the U.S. — is no longer a member.
“Although the loss of the U.S. represents a loss of approximately 60 percent of the original TPP market GDP, the original concessions to our domestic dairy market remain,” notes Dairy Farmers of Canada, in a news release calling Tuesday “a somber day for the 221,000 Canadians that depend on the dairy sector for their livelihood.”
Chicken Farmers of Canada is also “trying to figure out why Canada offered access to countries who didn’t request it and who didn’t offer anything in exchange, because in the original, the only country seeking chicken access was the USA,” says spokesperson Lisa Bishop-Spencer.
These groups are also voicing concern about the cumulative effect of giving up incremental market access in multiple trade deals, including the Canada-EU trade deal, TPP, and potentially, a new NAFTA...
Canada carves out more European cheese for retailers after EU concerns
Janyce McGregor | Aug 01, 2017
European trade deal takes hold Sept. 21 with 18,000 tonnes of new cheese imports phased in over 5 years
Trade Minister François-Philippe Champagne has disappointed Canada's dairy industry with a revised plan for how nearly 18,000 tonnes of European cheeses will be imported once the Canada-EU trade deal takes effect in September.
A much-anticipated announcement came Tuesday on how Canada will allocate tariff rate quota (TRQ) for 16,000 tonnes of fine cheese and 1,700 tonnes of industrial cheese...
Canada's Dairy Farm Investment Program ($50 million per year):
1. What is the Dairy Farm Investment Program?
The Dairy Farm Investment Program (DFIP) is a five-year (beginning fiscal year 2017-2018) $250-million program to help Canadian cow's milk producers improve productivity through upgrades to their equipment.
3. What is the purpose of the program?
The program is one of two new programs announced on November 10, 2016, to support the productivity of the dairy sector, as it adapts to the anticipated impacts from the Comprehensive Economic and Trade Agreement (CETA) with the European Union.
Trump might want to "clear the deck" for battle with China (and Europe?), but he will want to come out of NAFTA negotiation looking strong to China/Europe. Canada will probably give some on dairy and hold tight on dispute resolution, methinks. Not sure how much Trump wants to protect Big Pharma from generics--sounds inconsistent with his campaign rhetoric?
Trump’s NAFTA threat leaves Trudeau locked in high-stakes game of poker
Daniel Dale | Sept. 3, 2018
...(President) Trump’s thinking appears to be this: (PM) Trudeau will make concessions before the end of September because Congress, which is currently controlled by Republicans, would give Trump legal permission to proceed with a Mexico-only deal — and then would eventually vote to grant a Mexico-only deal final approval.
But neither of those two things is even close to certain. Some trade experts say they are unlikely.
...risk for Trudeau... Despite their early words on the U.S.-Mexico deal, congressional Republicans do not have a long history of standing up to a president who is overwhelmingly popular with party voters.
...The Canadian government official...said, though, that the congressional picture will improve further for Canada after members see the precise text of the U.S. deal with Mexico, which the official said includes provisions that will harm members’ communities and donors.
The congressional situation could get worse for Trump and better for Canada if Democrats win back control of the House of Representatives in November’s midterm elections...
But Trump is Trump, proud of his unpredictability and prone to vindictiveness. In addition to abandoning talks with Canada, as he threatened again on Saturday, he could decide to follow through on a repeated threat that does not, in his view, require congressional approval: imposing “national security” tariffs on Canadian-made cars.
There is possible downside for Trump there, too. Such a move could cause turmoil in stock markets and in Congress at a particularly inopportune time, just over a month before the midterms.
...“(Trump's) trying to get even with the prime minister, saying, ‘You’re not going to be pushed around? Well, just watch me,’” (Peter Clark, a veteran Canadian trade lawyer) said. “There’s no limits on his pettiness. The danger is very little of the stuff he does is logical.”
Trump’s NAFTA deal can’t solve America’s manufacturing problems
Marshall Auerback | September 4, 2018
...As a result of the militarization of what’s left of US manufacturing, along with the enlargement of the trans-Pacific supply chains with China (brought about through decades of offshoring), a mere tweak of the “new NAFTA” is unlikely to achieve Trump’s objective of revitalizing America’s industrial commons. With China’s entry to the WTO, it is possible that the US manufacturing has hit a “point of no return,” which mitigates the utility of regional trade deals, as a means of reorienting the multinational production networks in a way that produces high-quality, high-paying jobs for American workers...
Trump supporter's view of NAFTA negotiations and Trudeau.
(In the end he supports same deal (dairy for dispute resolution) that others do, but lots of dissing Trudeau in the process.)
Justin Trudeau finally gets the trade trouble he deserves
F.H. Buckley* | September 4, 2018
*F.H. Buckley is the author of the new book “The Republican Workers Party: How the Trump Victory Drove Everyone Crazy, and
Why It Was Just What We Needed.”
Poor Canadian negotiators, landing in DC just as Woodward book is revealed...
There's probably NOTHING staffers can do to shield NAFTA negotiations from Wrath of Trump?
Blame Canada - South Park: Bigger Longer & Uncut (3/9) Movie CLIP (1999) HD (2:04)
(Trumpian trade strategy?)
1) Decide trade deficit with country "A" is a big problem
2) Impose tariffs on that country
3) Drive down targeted country's currency
4) Make targeted country's imports cheaper, make your exports to that country more expensive
5) Bigger trade deficit with targeted country
David Frumn @davidfrum
5:57 AM - 5 Sep 2018
Canada's Trade Surplus With U.S. Widens to Most Since 2008
Greg Quinn | September 5, 2018
2018 Economic Calendar
International Trade | Released On 9/5/2018 8:30:00 AM For Jul, 2018
U.S. trade deficit surges to five-month high as exports fall
Lucia Mutikani | Sept 5, 2018
...“America still isn’t getting a fair deal on trade and that can only mean one thing,” said Chris Rupkey, chief economist at MUFG in New York. “President Trump is going unleash another $200 billion in tariffs on China imports.”
The Commerce Department said the trade deficit increased 9.5 percent to $50.1 billion as exports of soybeans and civilian aircraft dropped and imports hit a record high. The trade gap has now widened for two straight months.
...Imports of goods and services increased 0.9 percent to a record $261.2 billion in July. They were boosted by imports of computers and computer accessories. (defense against future tariffs?) The import bill was also inflated by petroleum imports, which were the highest since December 2014 amid higher oil prices.
...“Looking ahead, cooler global momentum and the stronger dollar will temper export growth while imports will stay well-supported by upbeat domestic demand, fiscal stimulus and the strong greenback,” said Oren Klachkin, lead economist at Oxford Economics in New York...
The Trade Slowdown Has Already Begun
David Fickling | September 7, 2018
As tariffs pile up, the world economy is starting to look holed below the waterline.
...Rolling three-month trade volumes are already in decline, a rare situation in recent decades
...For a better picture of what lies ahead, have a look at the way the world’s container-shipping lines are planning for the future. Order books* that ran in excess of 1,000 vessels before the 2008 financial crisis haven’t cracked one-fifth of that level since Trump came to power. If the global economy is going to ride out this latest round of tension, the merchant fleets on which trade depends aren’t seeing it.
* An order book is a business's list of open, unshipped, customer orders, normally time-phased and valued at actual individual order prices, that may include margin and profitability analysis.
Trudeau willing to be flexible on dairy, but Kudlow says that Canada isn't offering enough (probably CETA and TPP terms?).
Kudlow: "The word that continues to block the deal is m-i-l-k, OK? I'm just saying, 'Let go. Milk, dairy, drop the barriers, give our farmers a break and we can fix some other things.'"
Trump: Threatens auto industry with tariffs (again).
August jobs reports: U.S. up 200,000 while Canada down 50,000.
Trump says auto tariffs would be ‘ruination’ of Canada
By Rebecca Joseph | September 7, 2018 3:47 pm
...Trump spoke about trade talks with Canada, first to reporters on Air Force One then again at a fundraiser in North Dakota.
While also saying he wants to make a “fair deal” with Canada, he said he could impose the automobile tariffs.
“I don’t want to do anything bad to Canada. I can — all I have to do is tax cars — it would be devastating,” he said.
Later at the fundraiser, Trump said all he had to do is threaten Canada’s cars “and they say, ‘Okay we’ll make a deal!’”
“So every time I have a problem with these, you know, many of these countries that we’re talking about, especially the big car countries,” he went on. “I just say, ‘Okay! Look, that’s okay. I’m going to put a 20 per cent tax on your cars.’ ‘We’ll do it! We’ll do it, we’ll agree.’”
“Actually in Canada, a tax on cars would be the ruination of the country,” he continued.
While it’s an exaggeration that Canada would be ruined, economists have said the country’s GDP could slow by one per cent, and the effects could be doubled in Ontario — even sending the province into a recession...
'M-i-l-k' blocking NAFTA, says Trump adviser as Freeland departs Washington
Mike Blanchfield | September 7, 2018
...A senior government official, briefing reporters on background, said Freeland was departing Washington on Friday night, but would keep in touch with Lighthizer. Canadian and American negotiators would continue to meet...Canada and the U.S. are trying to agree on a text that could be submitted to the U.S. Congress by month's end in order to join the deal the Trump administration signed with Mexico last week.
In addition to dairy, the two countries still have to resolve differences on culture and the Chapter 19 dispute resolution mechanism. Prime Minister Justin Trudeau has said Canada could be willing to be flexible on dairy, but (Larry Kudlow, the director of President Donald Trump's National Economic Council) suggested Friday that Canada isn't offering enough.
"I think the United States would rather have a trade deal with Canada, but it has to be a good deal, right? And the word that continues to block the deal is m-i-l-k, OK?," Kudlow said on the Fox Business Network show "Varney & Co."
"I'm just saying, 'Let go. Milk, dairy, drop the barriers, give our farmers a break and we can fix some other things.' So I want to predict. I'll just say Bob Lighthizer is doing a great job and the president is encouraging it."
...The U.S. wants Canada to open its dairy market to greater American access, as it has done in two previous major trade agreements, with the European Union and in a re-booted Trans-Pacific Partnership.
The latter deal offered 10 other Pacific Rim countries access to 3.25 per cent of Canada's dairy market -- and most analysts predict the U.S. will settle for nothing less in NAFTA.
Trump also wants Canada to scrap its two-year-old pricing agreement that has restricted U.S. exports of ultra-filtered milk used to make dairy products.
...the subject (is) particularly politically charged in Ontario and Quebec...
U.S. Up 200,000 while Canada Down 50,000 in August Jobs Reports
Alex Carrick | September 7, 2018
U.S. total employment rose by 201,000 jobs in August, according to the latest Employment Situation report from the Bureau of Labor Statistics (BLS).
...The U.S. unemployment rate in the latest month stayed level versus the previous month at an exceptionally low 3.9%. A year ago, in August, the unemployment rate was 4.4%.
...besides construction, the U.S. registered strong hiring advances in ‘professional and business services’ and ‘education and health’ in August. Each took on +53,000 net staff members. (margd: Trump disregards services when looking at trade balance with Canada, only considering "goods".)
...For August, Statistics Canada’s Labor Force Survey records a month-to-month performance of -51,000 jobs. Also, the unemployment rate north of the border worsened to 6.0% from 5.8% in July.
...There’s a small measure of comfort to be taken from the full-time versus part-time mix of employment change in Canada in August. The former was +40,000 while the latter was -91,000.
...In year-over-year total jobs creation, Canada is presently trailing the U.S. +0.9% to +1.6%.
The disparity is worse in manufacturing, with Canada at -1.5% to America’s +2.0%.
Among provinces, Ontario (+79,000) is still the jobs creation leader on a year-over-year basis.
...With respect to month-to-month employment in August, however, Ontario suffered with a bad ‘toothache’, -80,000 jobs. In other words, Ontario bore the entire brunt of the nation’s total jobs loss in the latest month...unemployment rates...Ontario (5.7%)...
Canada job numbers questioned.
From my summer perch in Ontario, I don't see such devastation either(?)
Want jobs? They've (Ontario construction) got 'em
The Canadian Press - Sep 7, 2018
...Ottawa Construction Association President John DeVries said the data is a stark contrast from the stories of a "tight" labour market that he has been hearing about lately in the province.
...He said he was stumped about why StatCan's data reveals a very different finding, but hypothesized that it might be because people who respond to the telephone survey and say they are working in construction are really in a different industry or only loosely working in construction.
...University of Toronto professor Christo Aivalis, who specializes in labour, said it's unclear what fuelled any of the province's 80,100 job losses, which were predominantly in part-time work.
He figured many will blame an Ontario minimum wage hike in January from $11.60 to $14, but he wasn't convinced that was the reason because jobs growth was already slow when the new rate was introduced months ago.
"It is difficult to say why (job losses) would be happening," he said. "The economy in general remains strong."
Even (Cdn opposition) politicians aren't falling for this ‘weak’ jobs report
Kevin Carmichael | September 7, 2018
The labour market is nowhere near as bad as the headline numbers suggest; it's the other indicators that mean something
...Andrew Scheer, the Opposition leader, (isn't crowing) on the new hiring data, which show a big drop in employment last month
...StatsCan’s latest batch of numbers suggest job creation has stagnated this year; net employment was about 14,000 positions lower in August than at the end of 2017. But that stagnation has occurred at a high level. Think of the Canadian economy like a five-speed car that’s been running in fifth for a couple of years now. The unemployment rate was six per cent in August, up from 5.8 per cent, which was the lowest on records that date back to the mid-1970s. There probably is room for marginal improvement, but in effect, Canada’s economy has entered the zone that economists associate with full employment.
Ford Kills Plan to Sell Chinese-Made Cars in the U.S., and Trump Thinks It Means They're Going to Start Manufacturing Them Here Instead
Elizabeth Werth | 9/9/2018
...No, Ford is just… not going to sell these vehicles in the US at all.
...Ford isn’t getting rid of their plans to manufacture cars in China. They’re still going to do that! They’re just not going to sell those cars in the United States. Instead, they’re just going to find their markets elsewhere.
...So yeah, ceasing sales in the US might hurt Ford—but so will excessive tariffs. This whole deal isn’t really encouraging anyone to do much else, aside from root their heels down deeper in the dirt and play chicken until thing get bad enough that someone has to break.
Apple vs. Trump: Who is right?
Jefferson Graham | Sept. 9, 2018
Would you willingly spend $2,000 to buy an iPhone that today costs a grand?
That’s how much veteran analyst Tim Bajarin tells me it would cost Apple to retail if it made iPhones in the United States.
...Why shouldn’t Apple makes iPhones here?...It’s not just money. ..Skilled workers in China make about $100 a week, way less than we offer. There’s also the availability of parts in Asia and the lack of suitable manufacturing facilities here.
...Apple says it's the largest U.S. taxpayer, and that it's investing $350 billion in the economy over the next five years by building data centers and more in North Carolina, Oregon, Nevada, Iowa and Arizona.
Here's an interesting by-story on steel tariffs:
Steel workers union leaders demand pay increase as profits rise after tariffs
The price of steel jumped by more than 30 percent this year after the U.S. levied tariffs on foreign steel, causing profits to rise for the industry generally.
Union leaders say workers aren't seeing their compensation rise appropriately at U.S. Steel and ArcelorMittal SA, which make up 40 percent of the U.S. production capacity for flat-rolled steel.
Trump's trade war has China's stocks, currency taking a beating while the US market soars
Samuel Shen and John Ruwitch
Barely six months into a broadening Sino-U.S. trade war, Shanghai's stock market has lost about 20 percent.
In stark contrast, the technology heavy U.S. Nasdaq index is one of the world's biggest gainers, up about 15.5 percent.
And the war may have only just begun. Trump has said he is prepared to tax the entire roughly $500 billion of Chinese products that the United States imports annually.
Meanwhile, US markets have soared. Investors unsure about the trade war seem to think US technology stocks are insulated from any fallout.
China's currency is also down...
War games with Russia. Trade with North Korea. China's next move will be___________?
ETA: Silk highway, Africa, renewable technology... (G5?)
"Supply management means that Canadian prices are much higher, with two pounds of cheddar cheese at a Sam’s Club store in the U.S. selling for about US$3, versus US$5 across the border" Probably a loss leader or bulk buying by chains, but I've seen huge blocks of brand cheddar cheese for sale in Ontario grocery stores for $3.88 Cdn.
How the U.S. system of dairy import quotas and tariffs may be as protectionist as Canada's
Tom Blackwell | September 11, 2018
It imposes strict quotas on how much milk product it will import freely from other nations, sets high tariffs to limit imports above those quotas and generally opens only a small portion of its dairy market to foreign competitors.
It is, surprisingly, the United States, a country that some experts say erects the same kind of trade barriers to protect its dairy industry as those it constantly blasts Canada for imposing.
Yet the American system for managing dairy trade is in many ways similar to Canada’s, and the States actually imports proportionately fewer milk products than (Canada) does
...What is clearly different between the countries is the supply-management system in Canada that limits how much milk farmers can generate, and sets the price for their products, versus the more free-wheeling U.S. environment.
The Canadian creation two years ago of a low-priced alternative to a new U.S. dried milk product – and its effect on world prices – has added another irritation to the relationship.
...Canadian “outside-quota” tariffs are very high – as much as 300% for some products, a fact that Trump has often highlighted in his attacks on Canada’s protectionism. (margd: but prices are higher, which offsets the tariffs somewhat)
U.S. tariffs outside of the quotas are lower, the equivalent of about 30 per cent on cheddar cheese...but adding even that much on top of the base price discourages most exporters... (margd: also that prices in the US are lower, so less profit for Cdn dairy farmers who might otherwise export to the US)
...data from the U.S Agriculture Department...U.S. cheese imports are equivalent to about three per cent of its overall production. Canada already imports five to six per cent of its cheese, he said, and that figure will rise as new free-trade agreements with Europe and Pacific nations come online, giving those countries more of a foothold in the Canadian market. (margd; TPP concessions were made with US in mind, apparently, but other countries will take advantage of them with US out of TPP.)
The U.S. exported just under $500 million in dairy products to Canada under tariff-free quotas last year, about triple what it imported from here.
...Then there is class-seven milk, the ultra-filtered dried product that the Canadian industry authorized at a low price to compete with a new American export that circumvented the NAFTA exclusion of dairy. Not only did it deprive Americans of a substantial market, but when Canadians exported surplus class-seven, it depressed world prices... (margd: apparently this was what prompted complaints by US dairy farmers that caught Trump's ear.)
Sources close to the trade talks believe Canada may offer to end the class-seven milk program.
Top U.S. trade negotiator says Canadian dairy the most difficult issue of his career
Tom Blackwell | September 14, 2018
Doud said the challenge is the 'disparate' nature of the two dairy sectors, involving Canada’s 'closed' supply-management regime, and America’s open system
...chief agricultural negotiator Gregg Doud said both sides have been working “very, very hard,” with dairy the headline dispute.
“The amount of time we’re spending on Canada right now is extraordinary. We have one issue that’s probably the most difficult that I’ve ever seen in my career that we’re trying to deal with.”
...Aside from dairy, dealing with barriers to the Canadian grain market and wine retailing are the most important agriculture issues for the U.S. ... (Canada’s policy of automatically classifying U.S. grain exports as lower-priced feed grain...policies that give B.C. wines preferential treatment in the province’s grocery stores--margd: wine trade even difficult between provinces, e.g., BC complains about Ontario treatment of BC wines.)
...“We have spent an enormous amount of time working on this (dairy) issue. Good faith. Both countries are trying to resolve this issue,” (Doud) told the Senate agriculture committee Thursday
#23--which is to say a lot about our economy 'doing well' is really all the profits going into a few pockets. I don't really see any discernible differences in the area in which I live. Still loads and loads of people unemployed or underemployed. Many working two-three part time low paying jobs because employers don't want to pay their health care. These talking heads in the media want to talk up the economy all the time but just because the stock market is soaring doesn't mean that more than 50% of the population of this country can handle an issue that's going to cost them $500 or more. The all the time touted Trump tax bill targets 83% of its tax relief to the top 1% of the country. It's about corporations and wealthy people. They give everyone else temporary tax relief and then try to cut social services to pay for it. What they're giving the wealthy and corporations is not temporary--it's permanent.
These countries are most vulnerable to the emerging market storm
Matt Egan and Jordan Valinsky | September 16, 2018
Rising interest rates, along with trade wars, have started a stampede out of some emerging markets.
...countries most susceptible to the emerging market stress have several things in common.
First, they've piled on lots of dollar-denominated debt -- much of which is due soon. Second, they have relatively high overall levels of debt and low rainy-day funds. And these emerging markets are running trade and budget deficits.
So which countries fit these categories? Daw called out Turkey, South Africa, Malaysia, India and Indonesia as the most vulnerable.
"The misallocation of capital following a decade of cheap money is starting to be exposed," (Jason Daw, head of emerging markets strategy at Societe Generale) said.
China says Trump forces its hand, will retaliate against new U.S. tariffs
Yawen Chen, David Lawder | Sept 17, 2018
...Collection of tariffs on the long-anticipated U.S. list will start on Sept. 24 (10%) but the rate will increase to 25 percent by the end of 2018, allowing U.S. companies some time to adjust their supply chains to alternate countries.
So far, the United States has imposed tariffs on $50 billion worth of Chinese products to pressure Beijing to reduce its huge bilateral trade surplus and make sweeping changes to its trade, technology transfer and high-tech industrial subsidy policies.
Beijing has retaliated in kind (to previous tariffs on $50 billion), but some analysts and American businesses are concerned it could resort to other measures such as pressuring U.S. companies operating in China.
A senior Chinese securities market official said U.S. trade actions will not work as China has ample fiscal and monetary policy tools to cope with the impact. The government already has been ramping up spending on infrastructure.
So far, China has either imposed or proposed tariffs on $110 billion of U.S. goods, representing most of its imports of American products.
“Tensions in the global economic system have manifested themselves in the U.S.-China trade war, which is now seriously disrupting global supply chains,” the European Union Chamber of Commerce in China said in a statement on Tuesday.
China's yuan currency CNY=CFXS slipped against the dollar on Tuesday after news of the U.S. measures. It has weakened by about 6.0 percent since mid-June, offsetting the 10 percent tariff rate by a considerable margin.
CONSUMER TECH TRIMMED
The U.S. Trade Representative’s office eliminated 297 product categories from the latest proposed tariff list, along with some subsets of other categories.
But the adjustments did little to appease technology and retail groups who argued U.S. consumers would feel the pain.
“President Trump’s decision...is reckless and will create lasting harm to communities across the country,” said Dean Garfield, president of the Information Technology Industry Council, which represents major tech firms.
Kenneth Jarrett, president of the American Chamber of Commerce in Shanghai, said three quarters of its members will be hit by the tariffs, and they will not bring jobs back to the United States.
“Most of our member companies are ‘in China, for China’ - selling goods to Chinese companies and consumers, not to Americans - and thus ultimately boosting the U.S. economy,” Jarrett said.
Total Impact of Enacted and Announced Tariffs
Erica York and Kyle Pomperleau | 9/18/2018 (updated weekly)
...Total Impact of Enacted and Announced Tariffs
If all tariffs announced thus far were fully enacted by the United States and foreign jurisdictions, U.S. GDP would fall by 0.59 percent ($148.33 billion) in the long run, effectively offsetting one-third of the long-run impact of the Tax Cuts and Jobs Act. Wages would fall by 0.38 percent and employment would fall by 459,816.
The 0.59 percent reduction in long-run GDP is one-third the total long-run impact of the Tax Cuts and Jobs Act, which we estimated to raise GDP by 1.7 percent in the long run...
If additional tariffs and in-kind retaliatory actions continue to be taken, the harm caused to U.S. businesses and consumers would increase. The Trump administration would do well to not follow a path of imposing tariffs that could dampen the U.S. economic outlook.
China 'outraged' by US sanctions over Russian weapons buy
Associated Press | Sep 21, 2018, 6:55 AM ET
China said Friday it was "outraged" over U.S. economic sanctions against a Chinese military agency and its director over the purchase of Russian fighter jets and surface-to-air missile equipment, and demanded the U.S. cancel the measure.
...ban on entering the U.S., forbids conducting transactions with the U.S. financial system and forces the blocking of all property and interests in property within U.S. jurisdiction.
..."(China) strongly urge the U.S. to immediately correct its mistakes and revoke the so-called sanctions. Otherwise, it must take all the consequences"...
...China's purchase of the weapons from Rosoboronexport, Russia's main arms exporter, violated a 2017 law, the Countering America's Adversaries Through Sanctions Act, intended to punish the government of President Vladimir Putin for interfering in U.S. elections and other activities...
Walmart says new batch of Trump tariffs could force price hikes on bikes and Xmas lights
Charisse Jones | Sept. 21, 2018
..."Should the tariffs go into effect, Walmart customers will face cost increases for essential items like car seats, cribs, backpacks, hats, pet products and bicycles,'' the retailer said. And there will be a domino effect. "Either consumers will pay more, suppliers will receive less, retail margins will be lower, or consumers will buy fewer products or forego purchases altogether."
...“We are concerned about the impact on U.S. suppliers, consumers and manufacturers,’’ said Walmart spokesman Randy Hargrove in a statement. “We encourage the two countries to find near-term solutions to ease trade tensions that will allow more opportunities for U.S. exports and benefit families in both countries.’’...
The trade war reaches Procter & Gamble -- and into the medicine cabinet
Nathaniel Meyersohn | September 21, 2018
...P&G has plants across the United States and makes more than 90% of what it sells at home.
But like so many other American corporate giants, P&G relies on China for parts and materials to manufacture and package its brands. No one in the United States makes those components.
The company told the Trump administration that it uses Chinese parts to produce lines of Crest and Oral-B toothpaste and toothbrushes, Febreze air freshener, Downy and Bounce dryer sheets, Braun electric shavers, Head & Shoulders, Pantene and Olay shampoo, and a vacuum model of Swiffer.
...Tariffs "would undermine P&G manufacturing, U.S. jobs, and P&G's business competitiveness," Selina Jackson, the company's vice president for government relations, wrote to Trade Representative Robert Lighthizer on September 6. She warned the decision would drive up prices, reduce P&G's profitability and damage its market share...
Trump’s trade wars start biting GOP ahead of midterms
BEN WHITE | 09/24/2018
With fresh U.S. tariffs on Chinese goods taking effect Monday, company reports and prominent sentiment gauges are flashing early warnings for the economy.
...“Where you have real-world effects of the trade war, you see people’s opinions sour dramatically,” said Scott Lincicome, a trade lawyer and adjunct scholar at the Cato Institute who is studying the links between public opinion and trade. “You look at places like Washington state where people are dependent on exporting cherries and apples, or Rust Belt states that border Canada, or Tennessee with auto and bourbon makers, and you are going to see close races where this is actually a decisive issue.”
...Economists expect (tariffs) to translate into higher prices for consumers across the country and special pain for low- to middle-income voters who make up much of Trump’s base — and are least able to absorb increased costs for consumer goods such as air conditioners, clothing and furniture. Republicans are counting on getting Trump supporters to the polls in November to hold off projected Democratic gains in the House and potentially the Senate. Forcing consumers to pay higher prices could make that harder.
...Consumer sentiment measured by the University of Michigan dropped last month to its lowest point in nearly a year, with the decline centered in lower-income households most sensitive to higher prices. The sentiment index ticked up again in preliminary results for September. But nearly a third of those surveyed cited concern over tariffs when assessing the economy.
A survey of chief financial officers unveiled last week by Deloitte found that 42 percent said business conditions would improve next year, the lowest in two years, with executives “overwhelmingly worried” about trade policy and tariffs.
...Trump’s trade policies also are making it difficult for big business groups like the U.S. Chamber of Commerce, the National Association of Manufacturers and the National Retail Federation that generally support pro-business Republicans...The Chamber’s latest list of states impacted the most include Alabama, Michigan, Pennsylvania, South Carolina, Texas and Wisconsin...
Michael Bloomberg: "(Trump) says he wants to run the nation like he has run his business. God help us."
Why Canada Won’t Budge on Trade
Drew Fagan* | Sept. 24, 2018
Dispute settlements and dairy tariffs go to the heart of how Canada sees its relationship with the United States.
...the reason these talks have been so hard is that the two sides see them in fundamentally different terms. To Americans, Canada seems to be making a big fuss over minor details. To Canadians, Americans — and Mr. Trump above all — seem intent on undermining hard-fought protections.
Canada is perfectly happy to negotiate changes to Nafta; in fact, they’re overdue. The negotiations should have been about working together in the digital age. A deal should simplify rules of origin and align regulations for trade in goods, as well as focus on trade in services. It should open up government procurement and clarify intellectual property rules. Some of these are in play, but they’re hardly anyone’s priority.
Thirty years ago, Prime Minister Mulroney was intent on deepening trade relations with the United States. Now Prime Minister Trudeau has named a minister of international trade diversification. Diversification from what? No one in Canada need ask.
*Drew Fagan is a professor at the Munk School of Global Affairs and Public Policy, University of Toronto, and a former head of policy planning at Canada’s Foreign Affairs Department.
US-China trade war winner: Brazil soybean exports
Maylan Studart | September 25, 2018
China, which uses one-third of the world’s soybeans, imported 89% of its soybeans from the U.S. and Brazil last year, according to the American Farm Bureau Federation. And since China has slapped a 25% tariff on U.S. soybeans in retaliation for tariffs levied by U.S. President Donald Trump on China goods, that percentage will likely shift to Brazil. China has already become less reliant on the U.S. for soybeans. Last year, Brazil was China’s largest soybean exporter with 54 million metric tons, followed by the U.S. at 32 million metric tons.
Brazil President Michel Temer...on the sidelines of the 10th BRICS summit last month.
“When I was with president Xi Jinping in Johannesburg, I put in a program for soy, not just soybeans, but manufactured goods like soybean oil and soybean meal and president Xi said he would examine the issue,” said Temer. “I have the impression that it will proceed and it will increase.”
Brazil’s soybean exports to China have already been increasing. The U.S. Department of Agriculture said the share of Brazil’s soybean exports destined for China was 85% in August, up from 78% in July...
The UN laughed at Trump.
Rosenstein dissed him.
Kavanaugh proving an embarrassment and possible loss.
Canada given until Saturday to cave on NAFTA.
YIKES! SOMEBODY will be looking for sacrificial victim(s).
Why Canada’s leaders should wait out Trump’s NAFTA deal
(And why Americans should hope they do.)
TODD N. TUCKER and TIMOTHY MEYER | 09/25/2018
Autos and dispute resolution are the issues now on the US and Canadian table it sounds like? Digital trade and stronger labor and environmental standards that Mexico and US agreed on--wouldn't be disputed by Canada? No mention in article of dairy, drug generics, and intellectual property rights?
'We'll know in 48 hours': Mexico sees new hope of trilateral NAFTA
David Lawder, Adriana Barrera | September 28, 2018
...In Mexico, President-elect Andres Manuel Lopez Obrador told reporters that Washington had made a new counter-proposal to Ottawa...
...(Mexican Economy Minister Ildefonso) Guajardo said his U.S. and Canadian counterparts “specifically requested” a delay in publishing the text (for delivery to the Mexican and U.S. legislatures).
...The NAFTA text, either bilateral or trilateral, is due by late Sunday night to meet U.S. congressional notification requirements to allow U.S. President Donald Trump and outgoing Mexican President Enrique Pena Nieto to sign the pact before Lopez Obrador takes office on Dec. 1.
(Mexican President-elect) Lopez Obrador told reporters in Mexico City that Trudeau asked him during a Thursday phone call “to intervene and call on the U.S. government to reach an agreement” with Canada. “We agreed to that.”
He said that regardless of the outcome with Canada the language of the agreement between Washington and Mexico City was now final. “We are not going to re-open the negotiation. That you can be sure of,” Lopez Obrador said.
...Canada’s Liberal government says it does not feel bound by the latest NAFTA deadline, and it repeated on Friday that it would not bow to U.S. pressure to sign a quick deal.
THE IMPORTANCE OF CANADA
Some U.S. Democratic lawmakers said on Thursday after a meeting with U.S. Trade Representative Robert Lighthizer that they could not support a NAFTA deal without Canada.
...The U.S.-Mexico text will flesh out an agreement in principle that aims to rebalance automotive trade between the two countries and update NAFTA with new chapters on digital trade and stronger labor and environmental standards.
...(US-Mex agreement on) auto rules requiring an increase in regional value content to 75 percent from 62.5 percent previously, with 40 percent to 45 percent coming from “high wage” areas, effectively the United States...unlikely those targets can be met if Canada is not part of the deal, given supply chains in which parts crisscross NAFTA borders multiple times.
More light is likely to be shed on the enforcement of new labor standards and trade dispute settlement arrangements. The United States has said Mexico agreed to eliminate a system of settlement panels to arbitrate disputes over anti-dumping and anti-dumping tariffs. (margd: Canada wants to preserve dispute settlement system independent of US courts.)
...The release of the trade deal text will start a months-long process for U.S. congressional approval that will require a lengthy analysis by the independent U.S. international Trade Commission and notification periods before an up-or-down vote.
Interesting little piece about the personalities representing US and Canada in NAFTA negotiations:
Chrystia Freeland’s most important sparring partner isn’t Donald Trump
John Geddes | Sep 28, 2018
The U.S. president says he doesn’t like Canada’s foreign minister, but the more interesting dynamic is the contrast between Freeland and Robert Lighthizer, Trump’s trade czar
...(Chrystia) Freeland, 50, is a journalist-turned-politician, a consummate networker in liberal global elite circles. (United States Trade Representative Robert) Lighthizer, 70, is a trade lawyer with establishment Republican roots. To get a sense of where they’re coming from, let’s glance at what they were preoccupied with back in, oh, 2011—when Freeland was Reuters’ global editor-at-large and Lighthizer was in private practice in Washington.
In an op-ed piece in the New York Times in April of that year, Freeland started out by observing, “Global capitalism isn’t working for the American middle class.” She went on to unpack reports showing that technological change and globalization were enriching corporate executives but not ordinary folks. She concluded that U.S. politicians had to start figuring out, not how to dismantle the system, but to make it work for those in the middle class.
The following month, Lighthizer published an op-ed in the Washington Times. He took special note of rising enthusiasm among Republicans for, of all people, the long-shot presidential hopeful Donald Trump. In particular, he argued that Trump’s protectionist rhetoric, which orthodox free-trade conservatives were scoffing at, actually fit with an older Republican tradition of supporting tariffs. Lighthizer pointed abroad, particularly to China, at “state-sponsored, government-organized unfair trade” that was costing Americans jobs and America clout.
In a way, Freeland and Lighthizer weren’t so far apart back then. Both looked at the way the world economy was working in the globalized era and didn’t like the results in the U.S. After that, of course, they diverged. What’s fascinating about their clashing mindsets is how, to me at least, each of them looks to have been shaped by a preoccupation with one of the two biggest developments in geopolitics of their times. For Lighthizer, it’s the rise of China. For Freeland, the fall of the Soviet Union.
...Do they get along? It’s an interesting question, but not as interesting as what they represent. Lighthizer may be wrong about NAFTA, but he’s drawing on Republican tradition he’s studied carefully, and the real threat represented by China is never far from his mind. Freeland may have erred tactically in irritating Trump, but she’s giving voice to anxieties about populism and protectionism that are amply justified, and her grasp of contemporary Europe broadens her perspective...
Factbox: Details of the new North America free trade deal
October 1, 2018
MEXICO CITY (Reuters) - The United States and Canada forged a last-gasp deal on Sunday to salvage a three-country, $1.2 trillion open-trade zone agreement with Mexico that had been about to collapse after nearly a quarter century.
Here are some of the details in the agreement, which will change its name from NAFTA to the United States-Mexico-Canada Agreement (USMCA):
AUTOS SIDE LETTER...
RULES OF ORIGIN FOR AUTOS...
New NAFTA deal reached: Canada, U.S., Mexico reach trade agreement under new name
...Canada has made concessions on dairy market access that are slightly higher than under the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
...Chapter 19, the dispute resolution mechanism, which was a major sticking point in the negotiations, will be kept with no substantial changes.
...Concerning steel and auto tariffs, U.S. officials say they are on a separate track and are a side agreement that still will be dealt with.
...A review of the deal will come up every six years.
...Canada has agreed to a cap on its automotive exports to the United States in the event that the Trump administration imposes global auto tariffs on national security grounds.
...The quota would allow for some growth in tariff-free automotive exports from Canada above current production levels
Curious to see the "20 chapters that were modernized", e.g. e-commerce, agriculture--maybe generic drugs and intellectual property.
Interesting to see Jared Kushner role, e.g. dealing with his father-in-law as well as Mexican and Canadian negotiators:
Mexico may have lost most with new NAFTA deal, but calls it a win
Stephanie Nolen | Oct 1, 2018
...The bilateral deal (would have) left Mexico in a decidedly weaker position, and the dispute resolution mechanisms in Chapter 19 (negotiated by Canada) have value for Mexico
Campbell Clark: Canada made concessions on NAFTA but new deal avoids major damage to economy
...the overall feeling among Mexicans is perhaps best characterized as relief. Mr. Trump is seen as so unpredictable – and so irrationally convinced that Mexico was disproportionately benefiting from NAFTA at U.S. expense – that achieving any sort of a reasonable trade deal with him is seen as a victory.
...Mexico may have given up more than it needed to, particularly on auto production, where the rules were changed in a way that will favour more production from the U.S. and Canada.
...Mr. Videgaray is a close confidant of President Enrique Peña Nieto, and was seen as pushing for a deal the president could sign before he leaves office on Nov. 30 (thus giving him a legacy for a presidency that has been marred by scandal), even as Ildefonso Guajardo, the Economy Secretary who nominally headed the negotiating team, was pushing for slower talks.
...after winning the presidency with a sweeping majority, Mr. López Obrador tapped left-leaning economist and former negotiator Jésus Seade Kuri to head up a parallel NAFTA negotiation team of his own, and it largely backed the Peña Nieto team’s positions. And then Mr. Trump and Mr. López Obrador appeared to develop a certain rapport, which also softened the Mexico-U.S. relationship.
...(Moises Kalach, who heads Mexico's largest textiles group, and the international negotiating arm of the national business lobby) said the auto rules were the price Mexico had to pay to maintain the treaty, given that changes to car manufacturing and the jobs associated with it were Mr. Trump’s main priority going into negotiations. "Of course we don’t like that 25 per cent of the content that has to be produced in high-wage zones, but we understand that in a negotiation as big as this you cannot like 100 per cent of every decision,” he said. “But in the big picture, in the long term, it’s a good deal for our country – it keeps investments in our country safe."
He predicted that as Mexicans learn more about the final deal, they will feel more positive. "Twenty chapters were modernized and there are a lot of opportunities in there. There’s not a lot of talk about them but there is a lot of value there.” There are significant improvements in how e-commerce and anticorruption measures will be handled, he said, while the agriculture sector will get faster border processing and better sanitation rules.
“No duties were put on to any of our products, or quota
Negotiating with GOP's bull-elephant-in-must (to paraphrase former Canadian PM Pierre Trudeau):
In 12 steps, how troubled NAFTA 2.0 talks unfolded
Tonda MacCharles | Sept. 30, 2018
President Trump's Nafta deal with Canada imminent
Bloomberg News: Jenny Leonard, Josh Wingrove and Jennifer Jacobs | September 30, 2018
...Some people familiar with the talks credited Trump senior adviser Jared Kushner for helping smooth the path toward a deal. When it looked like negotiations had stalled or broken down due to friction between the U.S. and Canadian sides, Kushner kept talks going with aides close to Prime Minister Justin Trudeau, including Gerald Butts and Katie Telford, three people said.
U.s. Trade Representative Robert Lighthizer and Kushner were at the USTR office in Washington on Sunday afternoon negotiating final details by conference call with the Canadians in Ottawa. U.S. officials have been keeping President Donald Trump in the loop on every step since Friday, but there was no plan as of 6 p.m. to go to the White House to brief him in person, two people said...
from CBC - https://www.cbc.ca/news/politics/usmca-nafta-what-we-know-1.4845103 What we know so far.
I guess we will know in the morning.
Read the full text of the new United States, Mexico and Canada Agreement
Global News | Oct 1, 2018
(Full text) https://ustr.gov/trade-agreements/free-trade-agreements/united-states-mexico-canada-agreement/united-states-mexico#
...Here are some highlights from the agreement.
Canadian tariff schedule...
A conservative Canadian news paper:
Trudeau's claim of victory in trade deal is hollow - Canada was played
John Ivison | October 1, 2018
We are now in a new era of managed trade, where the U.S. has the ability to cap Canada’s growth
...This deal is fundamentally a story about the re-assertion of U.S. power. As Canada’s former ambassador to Washington, Charles Ritchie, wrote in his memoir Storm Signals, the president (in this case Lyndon B. Johnson) never listens, “or at any rate never listens to foreigners. The phrase ‘consultation with allies’ is apt to mean in U.S. terms, briefing allies, lecturing allies, sometimes pressuring allies…The word comes from Washington and is home-made.”
Plus ca change.
A social justice NGO (Canada):
The Good, the Bad, and the Ugly on NAFTA 2.0
Sujata Dey | October 1, 2018
...Here is the good, the bad, and the ugly within the agreement.
Good news first
► No Chapter 11 between the U.S. and Canada... (margd: e.g., US company Windstream Energy successfully sued Ontario over Great Lakes moratorium on offshore wind turbines.)
► No energy proportionality...
► Environmental and labour chapters...
► Farmers and BGH* milk...
► Gender and Indigenous chapters...
► Drugs and Patent Prices...
► Regulatory Cooperation...
► ISDS**still exists between the U.S. and Mexico...
There is a dispute settlement mechanism similar to Chapter 19 and a sunset clause for renewal of the agreement every 16 years. There are also side letters agreeing on the process of getting rid of 232*** tariffs on autos. Steel and aluminum tarrifs are not in the agreement.
This is a preliminary analysis. With our allies, we will continue to update you with more information. It is a comprehensive agreement, so it will take some time to understand the larger ramifications.
* Bovine Growth Hormone (banned in Canada but not the US)
**Investor-state dispute settlement (ISDS) or investment court system (ICS) is a system through which investors can sue countries for alleged discriminatory practices. (Wikipedia)
*** The Trade Expansion Act of 1962 aimed to increase overseas trade, primarily by giving the president broad authority to cut tariffs. By placing the responsibility for national security tariffs with the executive branch, Congress intended to make the process of imposing tariffs less political and better informed. https://www.rpc.senate.gov/policy-papers/national-security-tariffs-section-232
What's new in the US, Canada and Mexico trade deal?
Katie Lobosco, Donna Borak, and Tami Luhby | October 1, 2018
...Here are the biggest changes between the nearly 25-year-old NAFTA agreement and the new provisional USMCA.
Opening up Canada's dairy market...
Exchange rate curbs...
Help for American workers...
'Modernizing' NAFTA for the digital age...
Not sure how many Canadians will follow though after some time passes, but I am hearing boycott-talk among Cdn correspondents on Facebook and Twitter:
For Canada and U.S., ‘That Relationship Is Gone’ After Bitter Nafta Talks
Catherine Porter | Oct. 3, 2018
...Despite being a country of just 36 million, Canada is the biggest source of international travelers to the United States, its closest military ally and the biggest importer of American goods.
Many Canadians, who touted their relationship with Americans as the most successful partnership in the world, feel that the special bond is gone — or at least frayed...
...For many Canadians, the worst part was seeing that Mr. Trump’s sentiments had the support of many Americans. (Janice Stein, the founding director of the University of Toronto’s Munk School of Global Affairs) noted the latest Gallup poll, which showed Mr. Trump’s job approval rating at 42 percent.
“It’s really a deep shock for Canadians,” she said. “We need now to use the time the agreement provides us — 16 years — to adjust, to diversify our trade beyond the United States.”
“We have to invest more effort and resources in the rest of the G7 — independent of what the United States says — in Germany and France and Japan,” Ms. Stein continued. “It would be highly irresponsible not to after this.”...
Canada relieved trade deal done, won't forget Trump attacks
ROB GILLIES | Associated Press | Oct 4, 2018
...Bothwell, the University of Toronto professor, warned of lingering damage to relations.
"Trump treated it like a real estate deal when he was a shyster in Atlantic City," Bothwell said.
"But this is nation to nation. And that's different. And it's connected to other things," he added. "Trump really doesn't grasp that and doesn't care."
Liberal group praises Trump's NAFTA replacement as 'important progress'
Public Citizen, the left-of-center public interest group, on Wednesday praised President Trump's U.S.-Mexico Canada Agreement on trade, saying it represented a significant improvement over the North American Free Trade Agreement.
While the group said not every detail of the agreement was good and much rested on its implementation, it said the deal nevertheless represented "important progress."
"The revised deal could reduce NAFTA’s ongoing job outsourcing, downward pressure on our wages and environmental damage if more is done to ensure the new labor standards are subject to swift and certain enforcement, and some other key improvements are made," Public Citizen’s Global Trade Watch program said in an analysis released Wednesday.
Many progressive groups, Democratic lawmakers, and organized labor have been circumspect in discussing the NAFTA replacement deal. The agreement includes many changes that liberal trade skeptics have long called for, putting those groups in the awkward position of having to applaud Trump. Public Citizen's lengthy analysis delved into the details of the agreement — and found much to like.
Trump's USMCA deal is intended to prod manufacturers to locate more production in the U.S., long a goal of trade skeptics. Toward that end, it penalizes outsourcing to Mexico by requiring that 75 percent of the parts of a car need to be made in North America for it to be duty-free, up from the 62.5 percent level set by NAFTA. It also requires that at least 40 percent of all auto content be made by workers making at least $16 an hour or its equivalent.
U.S. not invited to Canada’s upcoming trade meeting — only ‘like minded’ nations allowed
Mike Blanchfield | Oct 4, 2018
...“Those who believe that a rules-based system is in the interests of the international community will meet to come up with a consensus that we will then move out into nations who might have been more resistant.”
Asked what his message to Americans is in the meantime, (Jim Carr, Canada’s newly appointed international trade diversification minister) replied: “That a rules-based system is good for them too.”...
Trade wars, increasing interest rates, disasters--what could possibly go wrong? :-(
The trade war will hit US and Chinese growth next year, the IMF warns
Donna Borak | October 8, 2018
...Despite healthy momentum in the United States, which received a boost from recent tax cuts, IMF economists now expect growth to slow to 2.5% next year from 2.9% this year. They cut the 2019 forecast by 0.2 percentage points because of the trade conflict.
...It cut the global forecast 0.2 percentage points to 3.7%, and predicted a downward trend over the next few years.
...There's plenty of scope for further damage if Trump follows through on his threats of further measures and China retaliates.
..."close to a percentage point" could be shaved off of global growth if the trade rift continues...
A Lot of Stocks Aren’t Keeping Up With the Dow. It’s a Pattern Usually Followed by Bad News
Evie Liu | Oct. 5, 2018
...Since the 1990s, there have only been six occasions when the Dow was at a 52-week high but less than half of NYSE stocks are above 200-day average. And it’s usually followed by bad news: Five times occurred in the years leading up to the 2000 dot-com bubble, and once before the Great Financial Crisis in 2008...
Ford Prepares for Mass Layoffs After Losing $1 Billion to Trump's Trade Tariffs, Report Says
Kevin Kelleher | October 10, 2018
Ford is having a bad year in 2018. Its stock is down 29%, and the tariffs imposed by President Trump have reportedly cost the company $1 billion, as the company is in the midst of a reorganization. Now, the company is announcing layoffs.
...While the company hasn’t said how many jobs will be lost, a report from Morgan Stanley estimates “a global headcount reduction of approximately 12 percent,” or 24,000 of Ford’s 202,000 workers worldwide.”...
Canada to impose new quotas, duties on steel imports in response to U.S. tariffs
Staff Reuters | Oct 11, 2018
Canada does not hold out much hope that Washington will quickly lift tariffs that it imposed on steel and aluminum exports and is resisting a U.S. push to agree to strict quotas, two sources familiar with the matter said.
The administration of U.S. President Donald Trump imposed the sanctions on Canada and Mexico in June, citing national security reasons. Although Canada and Mexico agreed a renewed continental trade deal last week, the measures remain in place.
Canada is the single largest supplier of both aluminum and steel to the United States. Washington worries that nations could try to ship supplies through Canada and pretend the metals had been produced in Canadian facilities.
In a bid to address those concerns the Canadian government – acting on a promise it made in March – on Thursday said it would impose new quotas and tariffs on imports of seven categories of steel* from many countries to head off a potential rise in imports.
A tariff of 25 percent will apply starting Oct. 25, 2018 to imports “in cases where the level of imports from trading partners exceeds historical norms,” a government statement said.
Mexico, one of the countries targeted by the new measures, said on Thursday it “lamented” Ottawa’s decision and would seek to have its exporters’ steel products excluded from the trade protections...
...In March, the United States signed a deal with Seoul whereby in exchange for an end to steel tariffs, South Korea agreed to cut exports by 30 percent of the past three years’ average.
During talks on the new United States-Mexico-Canada Agreement (USMCA), U.S. officials told Canada they wanted a similar arrangement for steel and aluminum...
Canada rejected the demand and made clear any cap on the metals would have be at a level higher than current exports to allow room for shipments to grow... (like autos in USMCA)
*The seven products are:
Concrete reinforcing bar (rebar)
Energy tubular products
Stainless steel wire
Those products help build condominiums, dams and bridges, "which encompasses a heck of a lot of steel," Jesse Goldman, a lawyer representing the Canadian Coalition for Construction Steel, told The Canadian Press.
Trump Is Risking an Even Greater Chicken War
Bloomberg Stephen Mihm | 10/15/2018
...When one country imposes tariffs on another, the eventual resolution of the conflict does not necessarily mean a return to the status quo. Instead, the penalties levied in the heat of a trade war can have destructive ripple effects long after the dispute is settled.
The textbook example of these unintended consequences was the so-called Chicken War between the U.S. and the European Economic Community, the precursor to the European Union, almost six decades ago. Although the clash lasted little more than a year, we still live with the repercussions today.
...what the architects of the (American's) retaliatory tariff (in retribution for European tariffs on chickens) could not imagine was the perverse consequences of the tax on (American auto industry)...
...This all began as a single, tiny trade dispute, with tariffs amounting to about $200 million in today’s dollars. Trump’s tariffs on China, by contrast, are 1,000 times larger and cover a far greater number of products.
...history suggests that the resolution of (today's trade war with China) -- if there is a resolution -- may have profound, enduring consequences for both countries.
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