Canadian consumer confidence slides as trade friction increases between US and Canada

(June 26) Canadian consumer confidence slides as trade friction between Canada and the U.S. escalates. A new poll by Nanos Research shows a sharp drop in household sentiment two weeks after Trudeau and Trump had a tiff after a G7 summit.

Canadian consumer confidence at lowest level in 2 years

Trump had threatened that his dispute with Canada over tariffs he levied on steel and aluminum would end up costing the Canadian people a lot of money. The consumer confidence level has fallen to the lowest level in two years.

Nick Nanos, the chair of Nanos Research said: “We rarely see an all out economic threat issued by anyone to Canada. It’s probably fair to say a certain proportion of Canadians think that Canada will pay and it won’t be a pleasant experience.”

The survey shows the extent to which the trade tensions are creating anxiety about the Canadian economy. The Canadian economy is highly dependent on that of the US for exports. The heightened uncertainty created by Trump's policies could prompt both consumers and businesses to scale back spending. This uncertainty could have a greater negative threat than the actual tariffs themselves.

Later this week the first survey of business sentiment since the recent G7 meeting in Canada are expected to be released. These should provide more insight into the extent to which the trade dispute is impacting investment decisions. On Thursday the Canadian Federation of Independent Business (CFIB) will release it small business barometer. On Friday, the Bank of Canada publishes a quarterly survey of executives.

The Nanos survey

Each week, Nanos Research polls 250 Canadian asking questions on personal finances, the outlook for the economy, job security. and where real estates prices are going. Bloomberg then publishes four-week rolling averages of the 1,000 telephone responses. The Bloomberg Nanos Canadian Confidence Index is calculated from the rolling averages of the above-mentioned four questions.

For the week ending June 22, the overall index was down to 55.3 the lowest since 2016 and down from the 57.1 of the previous week. The one week gap is the largest since Nanos began its polls in 2013

The results show a decline in sentiment for all questions but the largest drop is in the outlook for the economy. Only 14.7 of those polled thought that the economy would get stronger over the next six months. This is the lowest since 2015 when Canada was technically in a recession. The percentage who thought the economy would weaken was 38.2 the highest since back in 2016.

Nanos chair, Nik Nanos said: “Of note, there was negative pressure on all four economic indicators – personal finances, future strength of the Canadian economy, job security and future value of real estate. The most pronounced one-week drops in consumer confidence were in the Prairie regions and Ontario.”

US Canada relations are strained

An article in the Star shows the complex events that led ultimately to the Trump outburst against Trudeau at the end of the G7 summit in Canada. The articleconcludes: "In the end, a summit meant to patch trade rifts ended with a deeper acrimony and questions about the Canada-U.S. relationship and how it could recover in the crucial weeks ahead."

Trudeau had said at a press conference at the end of the conference that the decision to impose tariffs on Canadian aluminum and steel was insulting. Trump and his advisers were angry and Trump tweeted from Air Force one that Trudeau was dishonest and weak. His trade adviser, Peter Navarro even said that there was a special place in hell for leaders such as Trudeau who negotiated in bad faith Navarro later apologized, at least for his wording. Trump refused to accept the final joint communique.

Consumer confidence often a good guide to economic health

The tension with Trump has just added fears to households that were already uneasy about the future. For much of this year consumer confidence has been low. Headwinds have included higher interest rates and a slowing of the real estate market. For three quarters in a row economic growth has been unable to grow above 2 percent. Such a slow growth rate has not happened since 2015.

While most economist expect the economy to grow over 2 percent for the remainder of 2018, the recent tariffs and looming trade war could change the outlook. Nanos said: “We have to see whether things settle in terms of people thinking this is maybe a one-off or a significant decline is on the way."

Previously pubolished in Digital Journal

Canadian PM Trudeau says he is will to renegotiate NAFTA with Trump

Canadian Prime Minister Justin Trudeau says that he had a brief but good phone call with president-elect Donald Trump. Trudeau said that Trump "expressed warmth" towards Canada.

Trudeau said he congratulated Trump on his becoming president and expressed his willingness to discuss NAFTA with the Trump administration. Trudeau also extended an invitation to visit Canada.Trudeau said of the phone call: "It was a strong beginning to what will be a constructive relationship".

During his election campaign, Trump had stressed that he would renegotiate trade agreements to get a better deal for Americans. He has already signed an executive order withdrawing from the Trans-Pacific Partnership, which Obama had favored but was unable to have ratified in Congress. Trump also criticized NAFTA as a bad deal for America that needed to be renegotiated or dropped altogether. When reporters asked Trudeau what he hoped to gain by agreeing to reopen NAFTA before Trump had even asked to do so he said: “If Americans want to talk about NAFTA, I’m happy to talk about it." Trudeau said that the U.S. and Canada would work together constructively on renegotiating NAFTA as that is what people expect.

Canadian critics of the NAFTA agreement see renegotiation as an opportunity to reform the agreement. The Council of Canadians has always been critical of the agreement. The group even lists five main reasons why it thinks NAFTA should be renegotiated. Maude Barlow head of the Council has been actively tweeting about the renegotiations. A sample tweet: "NAFTA renegotiation must remove Chapter 11 that gives corporations the right to sue governments." Trump claims that he wants to open up NAFTA to create a better deal for Americans. Just as certainly, Canadians and Mexicans will be trying to get a better deal for them. The deal is in the interests of giant global corporations many with headquarters in the U.S. They may be quite unhappy about any attempt to benefit Americans which threatens their profits. Canadians and Mexicans may also be unwilling to accept any changes that hurt their citizens.

NAFTA went into effect on January 1 1994. There was considerable opposition in all three countries at the time. It is the largest agreement of its kind in the world. Critics point to NAFTA as helping to increase the profits of multinational corporations, and causing an increase in inequality in North America. They claim that NAFTA weakened labor rights and environmental protections.

Rabble claims that since 2004 500,000 manufacturing jobs were lost in Canada many of which were well-paid, permanent, and unionized. A Rabble article argues that Trump changes will not help reform NAFTA in the interest of workers:People should be angry that NAFTA has served the interest of multinational corporations and pushes policies of deregulation and privatization. Power and privilege is being used to skew the economic system to increase the gap between the richest and poorest people. People in all three countries should be under no illusion about Trump's rhetoric of renegotiating NAFTA, which seeks to pit workers against workers while giving tax-dodging big businesses more tax breaks, benefiting the corporate elites in the U.S. and further entrenching economic inequality.In part, Trump won the election because his plans to renegotiate NAFTA appealed to workers in rust-belt areas who were hurt by the terms of the deal. If Trump does nothing to improve their condition they may soon turn against him. However, so far Trump's team is filled with billionaires and people from Wall Street of the very type that he has constantly criticized. It will be interesting to see how Trump manages to change NAFTA in the interests of U.S. workers rather than multinational corporations. Alternative facts will probably play a significant role.

One issue that many critics will try to change are the investor-state dispute settlement provisions (ISDS) that gives corporations the right to sue governments for introducing regulations that could have a negative effect on their investments or expected future profits:These anti-democratic, supra-national corporate tribunals override the national court systems, eliminating government ability to regulate in the public interest by supporting industries that create good local jobs and by protecting the environment. Canada is already the most sued developed country in the world because of NAFTA's ISDS process.

NAFTA has had a devastating effect on more than two million small-scale Mexican farmers as the provisions of NAFTA favor the interests of large agri-business. Many Mexican farmers were forced off their land and some joined the many immigrants crossing the U.S. border searching for work. NAFTA does not recognize indigenous rights. Opening up NAFTA for renegotiating presents an opportunity to remove some of the worst aspects of the deal. Given the makeup of Trump's administration it seems highly unlikely that we will see any movement in that direction. However, pressure can be put on him to make some positive changes. Pressure will be needed by people in all three countries to make this happen. Trump is trying to circumvent this by his appeal to put Americans first thus creating divisions among Mexican, Canadian, and American workers.

With Trump win of US presidency Canada has an opportunity to renegotiate NAFTA

Donald Trump during his campaign vowed he would renegotiate the North American Free Trade Act (NAFTA). This provides a golden opportunity for Canada to alter some features of the agreement that should be changed.

Trudeau has said he was quite willing to discuss NAFTA with Trump. Trump said that he meant to move quickly on trade policies, according to an internal transition team document. The document claims he would drop out of the Trans-Pacific Partnership (TTP) unless certain demands were met. Within a hundred days of doing that the US could withdraw from NAFTA also unless his demands were met,

Even if Trump did pull out of NAFTA, the 1989 Canada-US agreement of 1989 removed most tariffs so trade would continue to flow. One benefit of NAFTA failing would be that Chapter 11 of the deal, the investor-state dispute settlement section (ISDS) would be gone. ISDS provisions allow corporations to sue governments before special tribunals. Opponents argue that investor claims that certain laws or regulations negatively impacted profits and were discriminatory could inhibit countries from passing strict environmental, health laws or labour or human rights. An early case involved Philip Morris and Uruguay that challenged Uruguay's strict laws governing smoking. Philip Morris lost. Another case involved the Canadian company Methanex that sued California: as noted by Wikipedia, the "Methanex Corporation challenged California's plan to eliminate methyl tertiary butyl ether (MTBE) from gasoline on grounds of water pollution prevention, claiming protection under Chapter 11 of NAFTA and demanding $970 million in compensation from the state."Methanex lost. However, the danger still remains of corporations winning as they often do, especially if based in the US: ISDS has been criticized because the United States has never lost any of its ISDS cases, and that the system is biased to favor American companies and American trade over other Western countries, and Western countries over the rest of the world. Soon after NAFTA was adopted, the Canadian government adopted a policy whereby all new laws and any changes to existing laws have to be vetted by trade experts to ensure they could not be challenged under ISDS rules. The elimination of Chapter 11 would be one giant step forward in renegotiating NAFTA.

NAFTA puts strict limitations on the ability of the Canadian government to reduce energy exports to meet Canadian needs or for environmental reasons: "The deals say that Canada must maintain at least the same level of oil and gas exports to the United States as it had supplied for the past thirty-six months. Only if Canadian consumption is cut proportionately, and then only in times of crisis, could the Canadian government claim jurisdiction over its own energy resources."

While Canadian Ambassador to the U.S., David MacNaughton says that the Liberal government would be glad to renegotiate NAFTA with the U.S. Trump administration, he refuses to disclose what Canada would be seeking in such a renegotiation. McNaughton claims that NAFTA has brought prosperity to the continent. Perhaps for international corporations. Maude Barlow, head of the Council of Canadians, counters: “Since NAFTA came into force on January 1, 1994, we've seen the loss of well over half a million manufacturing jobs in Canada, the net loss of one million jobs in the United States, and the displacement of millions of Mexican farmers. Employment trends suggest part-time precarious jobs with fewer benefits, while the income disparity in all three countries continues to grow."

Many analysts see NAFTA as posing a danger to the Canadian water supply. Maude Barlow writes: "The federal government should remove all references to water in all existing and upcoming trade and investment agreements as a good, a service or an investment, unless to allow for the specific protection or exclusion of water....Removing all references to water as a good from NAFTA would end the debate on whether the federal and provincial bans on water exports are sufficient, as it would remove any potential for a NAFTA challenge. Removing water as a service would help protect water as an essential public service. Removing it as an investment and excluding ISDS provisions would make it much harder for foreign corporations to use trade treaties to fight domestic or international rules that protect water."

The process of negotiating trade agreements is secretive and behind closed doors. There is little transparency, no public consultations, and no processes taking place in public. The Liberal government has given no indication it wants to change the process and has not said which aspects of the agreement it wants to renegotiate. Trudeau said: "The challenge is once you reopen it a little bit, they all tend to unravel, and it's too important for both of our economies to continue to have a strong trading relationship." Only by keeping public pressure on Trudeau for specific reforms are we likely to see Trudeau press for any progressive changes in the trade agreement. Every attempt will be made to retain a NAFTA that gives more power to global corporations. For further analysis, see the appended 1993 interview with Noam Chomsky on NAFTA.

Many cars made in Canada much cheaper in the U.S.

CBC news looked at prices of 24 new car models made in Canada. The study examined models made by: Ford, GM, Chrysler, Honda and Toyota. In 18 of the 24 the cost in Canada was thousands of dollars more than in the U.S.

Some models are even quite a bit cheaper in Hawaii. The Toyota Rav4 would cost 22,650 according to the manufacturers suggested retail price in Hawaii but there is an additional 810 dollars for freight and inspection. The cars are made in Woodstock Ontario Canada. To buy the car there would cost you 24,865 plus, get this, an additional freight and inspection charge of 1465 for exactly the same model!

Not all Canadian prices are higher. For some cheaper models they are about the same or lower. For example Toyota Corolla and Honda Civic are not more expensive here.

The Canadian Senate Finance Committee asked representatives of the Big Three auto manufacturers to appear before a committee to explain this strange pricing but they declined.

One might think that Canadians would be flocking to the U.S. to buy new cars but this apparently is not happening. Consumer advocate Rob Lamb says that most U.S.dealers will not sell to Canadians. Lamb says:"If you're a U.S. dealer you're not going to sell a brand-new car to a Canadian and that's it, and if you do you'll lose your licence, you'll be penalized. So dealers across the states are not selling new cars to Canadians," So much for free trade.For much more see this CBC article.

Mostly sweetness and light as US governors meet with Canadian Premiers

Since the deal on the Buy American policy no doubt the atmosphere in US Canada relations has improved considerably. But there are still some irritants remaining as the article notes. Not too surprising that Brad Wall should impress the Americans, since he is both right win and able to quote famous Americans in keeping with the context! Gary Doer seems to be keeping a relatively low profile as Harper's ambassador to the U.S. Maybe that is the way Harper likes it!



Sunday, February 21, 2010

U.S. governors sing the praises of Canada
Sheldon Alberts, Washington Correspondent, Canwest News Service


WASHINGTON -- Canadian politicians have long complained about the challenges of getting their voices heard in America's halls of power. But for seven Canadian premiers, there's no longer any reason to complain.

Armed with arguments and statistics in favour of free trade, and employing a bit of Canuck charm, Canada's provincial leaders got an enthusiastic welcome this weekend from U.S. state governors who generally endorsed calls for stronger cross-border ties and commerce.

By the end of the premiers' first-ever meeting Saturday with the National Governors Association, Pennsylvania Gov. Ed Rendell was singing a gravelly voiced rendition of O Canada. Mississippi Gov. Haley Barbour proclaimed the Canada-U.S. relationship as "breathtaking" and unique to the world.

And yet another governor, Minnesota Republican Tim Pawlenty, stressed the importance of Canadian crude oil to his state's economy.

Mr. Pawlenty, touted as a potential Republican presidential candidate in 2012, said it would be "very ill-advised" for the U.S. to impose any sort of barriers to Canadian oil.

That was music to the ears of western premiers who worry U.S. state and federal lawmakers will pursue environmental and trade measures to curb Canadian petroleum exports.

"Today's meeting with the National Governors Association was a huge step forward," said New Brunswick Premier Shawn Graham, whose province supplies about 60% of refined petroleum products into the Northeastern U.S. states.

"Security of supply of energy is critical for the U.S. economy to recover."

The recent resolution of Canada's dispute over Buy American provisions in the U.S. stimulus package contributed to the positive tone of the hour-long session at a downtown Washington hotel.

Mr. Rendell, a Democrat, was coaxed by a Canadian reporter into singing a verse from O Canada.

"I can't sing. I sound like a sick squirrel, but I will try my best," Mr. Rendell said.

Improvising his own lyrics, Mr. Rendell sang: "O Canada, proud, brave and free. O Canada, we stand on guard for thee."

Mr. Barbour, a Republican, said he was impressed with Saskatchewan Premier Brad Wall, who cited a famous quote by president John F. Kennedy on the strength of the Canada-U.S. relationship.

During a 1961 visit to Canada, Mr. Kennedy told Parliament "geography has made us neighbours. History has made us friends."

Mr. Wall "spoke to what every one of us here feels," Mr. Barbour said.

"The Canadians are not just our closest neighbours, they are our best friends," Mr. Barbour said. "There is hardly any place in the world where you could have an open border of this distance."

The premiers also met Sunday with U.S. Agriculture Secretary Tom Vilsack to raise ongoing complaints over country-of-origin labelling rules that Canada says unfairly damage exports of meat and food products to the United States.

The Buy American agreement saw 37 states sign onto World Trade Organization rules that will allow Canadian companies to bid on U.S. procurement projects, in exchange for American access to the Canadian market.

The premiers' meeting with the governors followed two high-level meetings on Friday with senior White House officials, including Larry Summers, economic czar, and Environmental Protection Agency administrator Lisa Jackson.

Ontario Premier Dalton McGuinty said he pressed U.S. leaders about the depth of protectionist sentiment caused by the recent recession.

"I have been reassured that, while it always has some seductive appeal, there is a new awareness ... that we have to guard against protectionism and keep our trade linkages strong," Mr. McGuinty said.

Premiers now hope Canada will get a permanent exemption from future Buy American measures.

"I think there is a good possibility they [will] recognize the need for a preferential treatment for Canada," said Manitoba Premier Greg Selinger.

"I don't think any of what they have tried to do . . . was intended to side-swipe Canada. But now we have to be there so they think about us when they make these kinds of decisions."

Gary Doer, Canada's ambassador to the U.S. and a former Manitoba premier, said the governors' relationship with the premiers can serve as model for how Ottawa and Washington get along.

Several premiers and governors, for example, had already developed close ties over the years through cross-border meetings at the regional level.

As premier of Manitoba, Mr. Doer negotiated the Western Climate Initiative with several states that set regional greenhouse gas emissions goals.

Deals struck between some provinces and states on tailpipe emissions are now being used as a model for national standards planned by Ottawa and Washington.

"It's a visible example of how premiers and governors are working on issues that could be left for international discussions, but rather can be solved in a more practical way," Mr. Doer said.

"All the work that states produce will be helpful to the U.S. government and all the work that provinces are able to achieve helps the government of Canada."

Alberta's Ed Stelmach, British Columbia's Gordon Campbell and Newfoundland and Labrador's Danny Williams were the only premiers who did not make the trip to Washington.

© 2010 The National Post Company. All rights reserved. Unauthorized distribution, transmission or republication strictly prohibited.

Canada may gain exemption from Buy America policy.

Naturally the deal would also give U.S. firms access to Canadian provincial programs as well. One would think that the Canadian government would need to get the agreement of each province for that but perhaps not. Certainly any exemption would help Canadian exporters and manufacturers. However, it seems not to be a done deal as yet. This is from the Globe and Mail.


Deal would give Canada Buy America exemption, report says

Globe and Mail Update Last updated on Wednesday, Sep. 30, 2009 10:44AM EDT
A deal to exempt Canada from Washington's controversial “Buy American” stimulus package clause is imminent, as Canadian and American officials continue to negotiate the details, the CBC reported Tuesday evening.
If an agreement is reached, it would come as a relief to Canadian manufacturers who have been shut out of lucrative American procurement contracts that are funded by American federal stimulus dollars and, as such, are restricted to American suppliers.
The CBC, citing government sources, said any deal would likely require Canadian provinces to open their stimulus programs to American firms.
Dimitri Soudas, a spokesman for Prime Minister Stephen Harper, would neither confirm or deny the report.
“At this time, I cannot confirm that the matter has been resolved. The Prime Minister and [International Trade] Minister [Stockwell] Day will continue to make our case until such time that the matter is resolved,” Mr. Soudas said in a late-night statement.
Mr. Harper has repeatedly raised the issue with United States President Barack Obama. Earlier this month, the two men met at the White House, and in a press conference afterwards Mr. Obama suggested there may be a way to exempt Canada from the clause.
“Prime Minister Harper, I want to emphasize, has brought this up with me every single time we've met, so he's been on the job on this issue,” Mr. Obama told reporters. “And our teams have been working together. It appears that there may be ways to deal with this bilaterally, but also potentially multilaterally.”
The stimulus package includes another clause saying it must be applied within existing trade agreements, such as the North American Free Trade Agreement.
Buy American, though popular with voters south of the border, has hurt many Canadian industrial exporters, who have seen American orders dry up. Some have seen their business cut in half.
They characterize the program as a protectionist measure that is impractical in the integrated economies. Among those calling on the White House to issue a Canadian exemption are several American companies, including General Electric, which found many of its programs stalled because of Canadian products included in their planning.
Mr. Soudas emphasized that Ottawa has pressed the issue in Washington.
“The Prime Minister has repeatedly raised our concerns over Buy America with the U.S. President. The Prime Minister also took the opportunity to raise our concerns over Buy America with the Senate and House leadership during his recent visit to Washington,” Mr. Soudas said.