(Globe & Mail via CSCB)
Both Hillary Clinton and Barack Obama are threatening to opt out of NAFTA if elected, which means re-negotiate, a position that is quite tenable particularly with a protectionist Congress. This really is about more than politics – this threat is genuine.
Negotiating treaties involves horse trading and results are uncertain. In preparation for negotiation of the predecessor 1989 Canada/U.S. Free Trade Agreement, the Hon. Donald MacDonald concluded after exhaustive study that Canada should make a "leap of faith" and plunge in.
Should Canada do so again? There may be no choice. And if that happens, we need to pay heed to at least three key areas.
NAFTA and US AD/CVD Law
A prime objective in negotiating the FTA was to obtain an exemption from U.S. laws against dumping and export subsidies.
U.S. anti-dumping and subsidy laws are regularly used by "injured" U.S. industry associations. The U.S. has a large trade law bar that, some say, encourages (if they needed it) U.S. industries to use these laws as a "sword." Canada hoped, based on our two integrated economies, that the U.S. would be sympathetic to granting the exemption.
What did Canada end up with in the FTA (carried over into NAFTA without the "improvements" to the "temporary" FTA solution)? A "binding" dispute settlement regime with panels of arbitrators reviewing decisions of the imposing country to assess whether its laws, not any objective, international standard, were properly applied. There were more than 20 panel reviews in the most recent case against Canadian softwood lumber (one of four) – and the issue is still unresolved.
But there is an alternative. The 1994 World Trade Organization agreements created the international standard and an enforcement regime. Thereafter, Canada could also go to the WTO for dispute settlement …
NAFTA and energy
… NAFTA's energy section broadly unfetters energy trade between the U.S. and Canada. But it adds a virtual guarantee of U.S. supply. (Mexico got a "pass" on energy.) Neither country may reduce the proportion of its energy exports to the other relative to the "total supply" of the exporting country during the prior 36-month period. The rub is that "total supply" includes shipments to its domestic and foreign users.
But if you look at the current energy landscape, China wants to buy Canadian energy. Canada imports more than 55 per cent of its oil needs. Canada continues to be the largest oil and gas supplier to the U.S. Let's assume Canada continues to consume the same quantities of its own energy production and importation. If so, could Canada sell energy to China, or any country other than the U.S.? No. The proportionality maintenance obligation prevents that.
When negotiating the FTA, Canada's concern was that the U.S., then desiring energy self-sufficiency, might impose restrictions on Canadian energy imports to stimulate U.S. production. Canada won the articles prohibiting restrictions on Canadian exports, and the U.S. won the proportionality maintenance commitment. The U.S. now looks to safe, stable and friendly suppliers, now a good idea considering politics in Venezuela, Iran and Iraq…
… the prospect of the U.S. walking from NAFTA and watching China and others scoop Canada's energy exports is slim to nil…
NAFTA and investment protection
… Foreign investment protection is alive and well world-wide. There are more than 2,000 bilateral investment treaties and they are based on the NAFTA model. Importantly, there is an "manager" for settlement of foreign investment disputes at the World Bank — the International Centre for the Settlement of Investment Disputes, under the ICSID Convention. All 144 signatory countries promise to enforce ICSID awards and not one has gone unsatisfied since the convention was established in 1966…
Monday, March 17, 2008
Sunday, March 9, 2008
Jack Layton Discusses Trade on CNN
Last Thursday, NDP leader Jack Layton appeared on CNN with host Lou Dobbs to discuss NAFTA, globalization and the offshoring of manufacturing jobs to China.
Friday, March 7, 2008
CBS MoneyWatch: Highs and Lows
Home foreclosures and mortgage payments in arrears in the United States are at an all-time high, crude oil topped a $105 per barrel and the U.S. dollar fell to a new low against the Euro.
Canada’s Dollar Gains as Prices of Commodity Exports Advance
(Bloomberg)
The Canadian dollar rose the most in more than a week against its U.S. counterpart as prices of the nation's commodity exports rose, bolstering the currency's appeal.
Canada’s dollar strengthened against 15 of the 16 most- traded currencies as crude oil climbed to a record after the Organization of Petroleum Exporting Countries gave no indication it will increase production. Gold prices also reached a record, and wheat advanced. Commodities account for about half of Canada’s exports.
“The strengthening prices of oil and gold are helping the Canadian dollar,” said David Bradley, a director of foreign exchange trading at Scotia Capital Inc. in Toronto. Click here for the complete article.
The Canadian dollar rose the most in more than a week against its U.S. counterpart as prices of the nation's commodity exports rose, bolstering the currency's appeal.
Canada’s dollar strengthened against 15 of the 16 most- traded currencies as crude oil climbed to a record after the Organization of Petroleum Exporting Countries gave no indication it will increase production. Gold prices also reached a record, and wheat advanced. Commodities account for about half of Canada’s exports.
“The strengthening prices of oil and gold are helping the Canadian dollar,” said David Bradley, a director of foreign exchange trading at Scotia Capital Inc. in Toronto. Click here for the complete article.
Can Profits Weather the Slowdown?
(Stephen Poloz, Export Development Canada)
The profitability of Canadian companies remained strong overall at least until the end of 2007, despite concerns about the economic storm clouds gathering just south of the border. Is the situation unique, and therefore sustainable, or an accident waiting to happen?
Total Canadian corporate profits were up 9.2% in the four quarters ending in 2007Q4. This pace was far in excess of the economy’s growth rate, which means that profits continued to rise as a share of total income. The leading profit-growth sectors were arts and recreation (63%), construction (26%), retail trade (25%) and real estate (19%). In contrast, profits were falling in sectors like agriculture, forestry, fishing and hunting (-32% overall), mining (-6%), oil and gas (-1%) and repair, maintenance and personal services (-6%). Manufacturing profits were up 3.3%.
Some of these results seem surprising, such as the strength in retail trade and weakness in mining and oil and gas, not to mention positive profit growth in manufacturing. But these data can be volatile, even when measured on a year-ago basis. It is helpful to look at profit margins, which are much smoother. The profit margin for the economy as a whole was 8.9% in 2007Q4, a very solid number. This number was as low as 3.3% back in late 1992, in the aftermath of recession, but spent most of the 1990s in the 6-7% range. In 2000 it drifted above 7%, faltered to 5.3% in late 2001, but then recovered steadily. In 2005, the aggregate profit margin moved above 8%, and it has fluctuated in a narrow range between 8.5% and 9.0% since that time.
One might suspect the oil and gas sector was behind this trend, but not so. Profitability in that sector peaked in 2005, and has been declining since. Even so, its five-year average profit margin is about 19%, more than double the economy average. In fact, the uptrend in overall profitability is mainly due to mining, where the margin has more than doubled since 2001-02 to around 18%, and finance and insurance, where margins have risen from 15-16% to about 27% in the same period. Real estate has moved up a little, too, to almost 20% most recently.
As for manufacturing, its overall profit margin at the end of 2007 was 6.3%, still in a range that has been typical for much of the past decade, except during the 2001-02 slowdown. Sub-sectors of rising profitability include non-metallic mineral products (15.8% most recently), computers and electronics (10.7%), and alcoholic beverages and tobacco products (25.0%).
Many other manufacturing sub-sectors are being squeezed, including motor vehicles (-1.2%, although parts manufacturers are still doing better overall, at 7.3%), wood and paper (1.1%), clothing and textiles (1.2%), furniture (3.6%) and primary metals (5.7%). But there is also a group that is showing relatively stable profitability, so far: transportation equipment; fabricated metal and machinery; chemicals, plastics and rubber; petroleum and coal products; food and soft drinks.
The bottom line? So far, the profit damage from the U.S. slowdown has been limited to a few sectors. This puts extra weight behind the recent survey of investment intentions by Statistics Canada, which indicated that investment will be a positive for the Canadian economy in 2008.
The profitability of Canadian companies remained strong overall at least until the end of 2007, despite concerns about the economic storm clouds gathering just south of the border. Is the situation unique, and therefore sustainable, or an accident waiting to happen?
Total Canadian corporate profits were up 9.2% in the four quarters ending in 2007Q4. This pace was far in excess of the economy’s growth rate, which means that profits continued to rise as a share of total income. The leading profit-growth sectors were arts and recreation (63%), construction (26%), retail trade (25%) and real estate (19%). In contrast, profits were falling in sectors like agriculture, forestry, fishing and hunting (-32% overall), mining (-6%), oil and gas (-1%) and repair, maintenance and personal services (-6%). Manufacturing profits were up 3.3%.
Some of these results seem surprising, such as the strength in retail trade and weakness in mining and oil and gas, not to mention positive profit growth in manufacturing. But these data can be volatile, even when measured on a year-ago basis. It is helpful to look at profit margins, which are much smoother. The profit margin for the economy as a whole was 8.9% in 2007Q4, a very solid number. This number was as low as 3.3% back in late 1992, in the aftermath of recession, but spent most of the 1990s in the 6-7% range. In 2000 it drifted above 7%, faltered to 5.3% in late 2001, but then recovered steadily. In 2005, the aggregate profit margin moved above 8%, and it has fluctuated in a narrow range between 8.5% and 9.0% since that time.
One might suspect the oil and gas sector was behind this trend, but not so. Profitability in that sector peaked in 2005, and has been declining since. Even so, its five-year average profit margin is about 19%, more than double the economy average. In fact, the uptrend in overall profitability is mainly due to mining, where the margin has more than doubled since 2001-02 to around 18%, and finance and insurance, where margins have risen from 15-16% to about 27% in the same period. Real estate has moved up a little, too, to almost 20% most recently.
As for manufacturing, its overall profit margin at the end of 2007 was 6.3%, still in a range that has been typical for much of the past decade, except during the 2001-02 slowdown. Sub-sectors of rising profitability include non-metallic mineral products (15.8% most recently), computers and electronics (10.7%), and alcoholic beverages and tobacco products (25.0%).
Many other manufacturing sub-sectors are being squeezed, including motor vehicles (-1.2%, although parts manufacturers are still doing better overall, at 7.3%), wood and paper (1.1%), clothing and textiles (1.2%), furniture (3.6%) and primary metals (5.7%). But there is also a group that is showing relatively stable profitability, so far: transportation equipment; fabricated metal and machinery; chemicals, plastics and rubber; petroleum and coal products; food and soft drinks.
The bottom line? So far, the profit damage from the U.S. slowdown has been limited to a few sectors. This puts extra weight behind the recent survey of investment intentions by Statistics Canada, which indicated that investment will be a positive for the Canadian economy in 2008.
Wednesday, March 5, 2008
Industry Week Poll on NAFTA
Industry Week is running an online poll on the home page of its website.
Which of the following actions should the U.S. take on NAFTA?
• Withdraw from NAFTA immediately.
• Try to renegotiate NAFTA in the next 6 months, and withdraw if more favorable terms are not met.
• Keep NAFTA as it is.
Current results indicate almost even three-way split between the various choices.
Update 03-07-08: Current results trending towards renegotiation (38%) with the other two options at approx. 31% each.
Which of the following actions should the U.S. take on NAFTA?
• Withdraw from NAFTA immediately.
• Try to renegotiate NAFTA in the next 6 months, and withdraw if more favorable terms are not met.
• Keep NAFTA as it is.
Current results indicate almost even three-way split between the various choices.
Update 03-07-08: Current results trending towards renegotiation (38%) with the other two options at approx. 31% each.
Canada Scores Victory in Softwood Fight
(Globe & Mail via CSCB)
Canada won a sizeable legal victory today over the United States Tuesday after a private court settled the first dispute to flare up over the 2006 softwood lumber deal between Ottawa and Washington.
The decision is expected to infuriate the hard-line U.S. softwood lumber lobby, which will likely push for a judicial review of the ruling…
… the point Canada won – whether Alberta and B.C. producers should have been paying higher export taxes in the months after the deal was inked – will save those provinces as much as $75-million in export levies…
International Trade Minister David Emerson, said: “We are pleased that the tribunal agreed with our interpretation that the adjustment factor is not applicable to British Columbia and Alberta. However, we are disappointed that the tribunal did not agree with our position that adjustments were to commence as of July 1, 2007.”
The compete statement from the minister regarding the decision can be found here.
Canada won a sizeable legal victory today over the United States Tuesday after a private court settled the first dispute to flare up over the 2006 softwood lumber deal between Ottawa and Washington.
The decision is expected to infuriate the hard-line U.S. softwood lumber lobby, which will likely push for a judicial review of the ruling…
… the point Canada won – whether Alberta and B.C. producers should have been paying higher export taxes in the months after the deal was inked – will save those provinces as much as $75-million in export levies…
International Trade Minister David Emerson, said: “We are pleased that the tribunal agreed with our interpretation that the adjustment factor is not applicable to British Columbia and Alberta. However, we are disappointed that the tribunal did not agree with our position that adjustments were to commence as of July 1, 2007.”
The compete statement from the minister regarding the decision can be found here.
China to Enact New Product Safety Rules in Bid to Restore Reputation
(The Canadian Press)
The Chinese premier said Wednesday that Beijing is taking steps to ensure its product safety regulations meet international standards, signalling another phase in China's wide-ranging campaign to repair its battered reputation as an exporter.
China's exports have come under heavy scrutiny in the last year after potentially deadly levels of chemicals were found in goods ranging from toothpaste to toys to a pet food ingredient.
“It is imperative that the people feel confident about the safety of food and other consumer goods and that our exports have a good reputation,” Premier Wen Jiabao said Wednesday during an address to the National People's Congress, China's legislature.
Measures to ensure the quality of products for both domestic and international consumption will include creating or updating 7,700 national safety standards, he said.
Requirements and testing methods related to food and product safety will meet international standards, Wen said.
Wen also said co-ordination between law enforcement and prosecutors needs to be improved to increase penalties for guilty producers.
China last year announced a series of measures to boost product supervision and declared as a success a four-month quality and safety campaign that ended in December.
With the Beijing Olympic Games less than 200 days away, authorities have pledged to take rigorous measures to ensure food safety.
The Chinese premier said Wednesday that Beijing is taking steps to ensure its product safety regulations meet international standards, signalling another phase in China's wide-ranging campaign to repair its battered reputation as an exporter.
China's exports have come under heavy scrutiny in the last year after potentially deadly levels of chemicals were found in goods ranging from toothpaste to toys to a pet food ingredient.
“It is imperative that the people feel confident about the safety of food and other consumer goods and that our exports have a good reputation,” Premier Wen Jiabao said Wednesday during an address to the National People's Congress, China's legislature.
Measures to ensure the quality of products for both domestic and international consumption will include creating or updating 7,700 national safety standards, he said.
Requirements and testing methods related to food and product safety will meet international standards, Wen said.
Wen also said co-ordination between law enforcement and prosecutors needs to be improved to increase penalties for guilty producers.
China last year announced a series of measures to boost product supervision and declared as a success a four-month quality and safety campaign that ended in December.
With the Beijing Olympic Games less than 200 days away, authorities have pledged to take rigorous measures to ensure food safety.
Tuesday, March 4, 2008
CBC National: Obama Campaign, NAFTA & the Canadian Government
Further clarification on the nature of the disucssions between Obama's presential campaign and the Canadian Embassy.
CTV on Obama, Clinton and NAFTA
CTV News reports on communications between the Obama campaign and the Canadian government regarding NAFTA and campaign rhetoric.
Candidates’ NAFTA Stance Stirs Canada
(Financial Times)
Canada has warned that the U.S.’s privileged access to its oil and natural gas could be in jeopardy if a Democratic administration backtracks on the North American Free Trade Agreement.
Canada is the U.S.’s biggest foreign oil supplier, exporting close to 1.8m barrels a day - more than 10 per cent of U.S. consumption. NAFTA provisions make it difficult for Canada to restrict oil shipments to the U.S.
“If NAFTA is ripped up then the Chinese can buy more of our oil; there’s no further obligation on the part of Canada to sell its oil to the U.S.,” a Canadian diplomat told the Financial Times.
He was responding to statements this week by Barack Obama and Hillary Clinton, the two Democratic presidential hopefuls, that they would be prepared to pull out of NAFTA it was not renegotiated.
“We will opt out of NAFTA unless we renegotiate it and we renegotiate on terms that are favourable to all of America,” Mrs Clinton said in her debate with Mr Obama in Ohio.
George W. Bush, U.S. president, criticised the Democratic rivals for “trying to score political points” at NAFTA ‘s expense and said the U.S. had benefited from the deal.
“One statistic I think people need to know is there’s roughly like $380bn worth of goods that we ship to our NAFTA partners on an annual basis,” he said, in a White House press conference.
“There’s a lot of farmers and businesses, large and small, who are benefiting from having amarket in our neighbourhood.”
Although Mexico, the third signatory to the treaty, is the overwhelming focus of much of the U.S. disquiet about NAFTA, Canada would also be affected by a renegotiation and has signalled that it would have demands of its own.
“NAFTA has been kind of a foundation of integrating the North American energy market,” David Emerson, Canada’s trade minister, said in Ottawa. “If you reopen [NAFTA] for one or two issues, you cannot avoid reopening it across a range of issues.” Click here for the complete article.
Canada has warned that the U.S.’s privileged access to its oil and natural gas could be in jeopardy if a Democratic administration backtracks on the North American Free Trade Agreement.
Canada is the U.S.’s biggest foreign oil supplier, exporting close to 1.8m barrels a day - more than 10 per cent of U.S. consumption. NAFTA provisions make it difficult for Canada to restrict oil shipments to the U.S.
“If NAFTA is ripped up then the Chinese can buy more of our oil; there’s no further obligation on the part of Canada to sell its oil to the U.S.,” a Canadian diplomat told the Financial Times.
He was responding to statements this week by Barack Obama and Hillary Clinton, the two Democratic presidential hopefuls, that they would be prepared to pull out of NAFTA it was not renegotiated.
“We will opt out of NAFTA unless we renegotiate it and we renegotiate on terms that are favourable to all of America,” Mrs Clinton said in her debate with Mr Obama in Ohio.
George W. Bush, U.S. president, criticised the Democratic rivals for “trying to score political points” at NAFTA ‘s expense and said the U.S. had benefited from the deal.
“One statistic I think people need to know is there’s roughly like $380bn worth of goods that we ship to our NAFTA partners on an annual basis,” he said, in a White House press conference.
“There’s a lot of farmers and businesses, large and small, who are benefiting from having amarket in our neighbourhood.”
Although Mexico, the third signatory to the treaty, is the overwhelming focus of much of the U.S. disquiet about NAFTA, Canada would also be affected by a renegotiation and has signalled that it would have demands of its own.
“NAFTA has been kind of a foundation of integrating the North American energy market,” David Emerson, Canada’s trade minister, said in Ottawa. “If you reopen [NAFTA] for one or two issues, you cannot avoid reopening it across a range of issues.” Click here for the complete article.
Meet The Press: NAFTA & the U.S. Economy
Political advisers for both the Democrats and Republicans discuss the presidential candidates’ positions on NAFTA and the U.S. economy.
Clinton Obama Cleveland debate: Is NAFTA Good Or Bad?
Democratic presidential candidates Hillary Rodham Clinton and Barack Obama debate NAFTA -North American Free Trade Agreement.
Monday, March 3, 2008
NAFTA Ministers Direct Further Efforts on Border Security, Food Safety, IPR
U.S., Canadian and Mexican officials met last week to discuss efforts under the trilateral Security and Prosperity Partnership. A joint statement issued at the conclusion of the meeting indicated that the officials have directed their appropriate agencies to take the following actions, and to consider innovative ways to advance the priorities indicated, ahead of a NAFTA leaders’ summit in New Orleans April 21-22.
Competitiveness
• continue to implement the strategy to combat piracy and counterfeiting
• build on the Regulatory Cooperation Framework by pursuing collaboration through sectoral initiatives, with an emphasis on the automotive sector
Food and Product Safety
• strengthen cooperation to better identify, assess and manage unsafe food and products before they enter North America
• collaborate to promote the compatibility of the countries’ related regulatory and inspection regimes
Energy and Environment
• develop projects under the newly signed Agreement on Science and Technology
• cooperate on auto fuel efficiency, energy efficiency standards and moving new technologies to the marketplace
Border Security
• strengthen cooperation protocols and create new mechanisms to secure common borders while facilitating legitimate travel and trade in the North American region
Emergency Management and Preparedness
• strengthen capacity for emergency management cooperation in the region before, during and after disasters
In addition, the statement said, the three NAFTA partners will explore new avenues of cooperation and convergence to address issues such as arms trafficking, terrorism, money laundering, counterfeiting, trafficking of people and smuggling, and border violence.
Competitiveness
• continue to implement the strategy to combat piracy and counterfeiting
• build on the Regulatory Cooperation Framework by pursuing collaboration through sectoral initiatives, with an emphasis on the automotive sector
Food and Product Safety
• strengthen cooperation to better identify, assess and manage unsafe food and products before they enter North America
• collaborate to promote the compatibility of the countries’ related regulatory and inspection regimes
Energy and Environment
• develop projects under the newly signed Agreement on Science and Technology
• cooperate on auto fuel efficiency, energy efficiency standards and moving new technologies to the marketplace
Border Security
• strengthen cooperation protocols and create new mechanisms to secure common borders while facilitating legitimate travel and trade in the North American region
Emergency Management and Preparedness
• strengthen capacity for emergency management cooperation in the region before, during and after disasters
In addition, the statement said, the three NAFTA partners will explore new avenues of cooperation and convergence to address issues such as arms trafficking, terrorism, money laundering, counterfeiting, trafficking of people and smuggling, and border violence.
Exporting: It’s Time to Swim
(Canadian Business – Megan Harman)
Canadian manufacturers treading water might have to start swimming across the Pacific Ocean to keep afloat. And their destination need not be just China. The United Arab Emirates and India are also big markets where Canadian products should have a greater presence, says Harinder Takhar, Ontario’s minister of small business and entrepreneurship. “There are tremendous opportunities in both these countries,” he said at a Toronto roundtable event in January, where small and medium-sized manufacturers pitched ways the government can help the industry.
Between the strong Canadian dollar, a skilled-labour shortage and a U.S. economic downturn hampering the one market that exporters depend on most, the manufacturing outlook for the foreseeable future is the dimmest in years. No wonder companies might feel they have enough to handle without tackling new markets. “We’re a manufacturer. We’re not in the business of finding global markets,” says Jason Galamaga, co-owner of Modern Age Plastics Inc., a Toronto producer of signs and displays. Modern Age Plastics has fewer than 100 workers and lacks the resources to expand abroad, a problem facing most Ontario manufacturers since 99.5% of them have fewer than 500 employees. Read the entire article.
Canadian manufacturers treading water might have to start swimming across the Pacific Ocean to keep afloat. And their destination need not be just China. The United Arab Emirates and India are also big markets where Canadian products should have a greater presence, says Harinder Takhar, Ontario’s minister of small business and entrepreneurship. “There are tremendous opportunities in both these countries,” he said at a Toronto roundtable event in January, where small and medium-sized manufacturers pitched ways the government can help the industry.
Between the strong Canadian dollar, a skilled-labour shortage and a U.S. economic downturn hampering the one market that exporters depend on most, the manufacturing outlook for the foreseeable future is the dimmest in years. No wonder companies might feel they have enough to handle without tackling new markets. “We’re a manufacturer. We’re not in the business of finding global markets,” says Jason Galamaga, co-owner of Modern Age Plastics Inc., a Toronto producer of signs and displays. Modern Age Plastics has fewer than 100 workers and lacks the resources to expand abroad, a problem facing most Ontario manufacturers since 99.5% of them have fewer than 500 employees. Read the entire article.
Courier Low Value Shipment (LVS) Program Review
(IE Canada)
The Canada Border Services Agency (CBSA) is undertaking a Courier Low Value Shipment (LVS) Program Review. The Review team is taking a comprehensive approach, consulting not only internally within the CBSA but also widely within the industry and with other government departments and stakeholders.
Since the inception of the Courier Low Value Shipment (LVS) Program in the early 1990s, volumes in the courier stream have risen by approximately 433% from 6 million to over 26 million shipments annually. As well, there is an increasing emphasis on securing the trade supply chain through the use of advance information and modern contraband detection technology.
The purpose of the Courier LVS Program Review is to re-examine and re-evaluate the program in light of the current environment with the objectives of identifying present and future model flows; best industry practices both nationally and internationally; co-operative risk management measures; and opportunities for automation and the streamlining of processes. The review team will identify short, medium, and long-term goals for process improvement.
The Canada Border Services Agency (CBSA) is undertaking a Courier Low Value Shipment (LVS) Program Review. The Review team is taking a comprehensive approach, consulting not only internally within the CBSA but also widely within the industry and with other government departments and stakeholders.
Since the inception of the Courier Low Value Shipment (LVS) Program in the early 1990s, volumes in the courier stream have risen by approximately 433% from 6 million to over 26 million shipments annually. As well, there is an increasing emphasis on securing the trade supply chain through the use of advance information and modern contraband detection technology.
The purpose of the Courier LVS Program Review is to re-examine and re-evaluate the program in light of the current environment with the objectives of identifying present and future model flows; best industry practices both nationally and internationally; co-operative risk management measures; and opportunities for automation and the streamlining of processes. The review team will identify short, medium, and long-term goals for process improvement.
CBS MoneyWatch: Buffet Says U.S. in Recession
Billionaire investor Warren Buffett says that the United States is in a recession. And the auto industry continues to suffer from sluggish sales.
Government of Canada to Fund Expansion at Border Crossing Facility in Lacolle, Quebec
(Transport Canada)
The Government of Canada will commit $10 million to expand the Canada Border Services Agency (CBSA) facilities at the Lacolle-Champlain border crossing, one of the ten busiest Canada-United States border crossings. The Honourable Stockwell Day, Minister of Public Safety, made the announcement today on behalf of the Honourable Lawrence Cannon, Minister of Transport, Infrastructure and Communities.
Funded through the Gateways and Border Crossings Fund, the project consists primarily of the expansion of commercial and bus processing facilities. The project is designed to improve border infrastructure along the Canadian side of the corridor, enhance safety, and relieve traffic congestion. More information here.
The Government of Canada will commit $10 million to expand the Canada Border Services Agency (CBSA) facilities at the Lacolle-Champlain border crossing, one of the ten busiest Canada-United States border crossings. The Honourable Stockwell Day, Minister of Public Safety, made the announcement today on behalf of the Honourable Lawrence Cannon, Minister of Transport, Infrastructure and Communities.
Funded through the Gateways and Border Crossings Fund, the project consists primarily of the expansion of commercial and bus processing facilities. The project is designed to improve border infrastructure along the Canadian side of the corridor, enhance safety, and relieve traffic congestion. More information here.
Is the Slowdown Spreading? Ask Producers
(Peter G. Hall, Vice-President and Deputy Chief Economist, Export Development Canada)
Last year, decoupling was all the rage. Sure, the U.S. economy was going flat, but many asserted that the malaise was more or less confined within US borders. But what was loudly proclaimed mere weeks ago has now gone strangely silent. Is decoupling dead, or has it just gone dormant?
The debate centers around sequencing. Our increasingly synchronized, just-in-time world likely led many economy-watchers to expect a more simultaneous slowdown. And when the largest single economy began to falter in mid-2006 with no immediate external effects, hopes of a confined slowdown were kindled. The more optimistic pundits were even more hopeful, confining the slowdown to just one sector of the U.S. economy. But slowdown has spread to other parts of the U.S. economy, perhaps more gradually than expected, casting increasing doubt on decoupling.
Is the slowdown spreading internationally? Industrial production data give us a clue. In the U.S., industrial production has been roughly flat for 6 months. Not only is this further evidence of a generalized slowdown within the U.S., but it comes in spite of a weak-currency-inspired resurgence in exports. But as the U.S. malaise is already well-digested, this is not really a surprise.
What of other countries? First, the developed world. Eurozone production declined in three of the last four months, and between August and December 2007, year-over-year growth fell from 4.6% to just 1.3%. Deceleration is evident in Germany, where growth stalled late last year. Annual growth in France is a fraction of Germany’s, and recent monthly performance has been spotty. Output has been flat in the UK for seven months, while Spain and Italy have recently slid into deep decline. Industrial production in Japan is still growing, but the pace has diminished steadily, to about one-third of its late-2006 rate. This sounds like a lot more than a U.S.-only phenomenon.
The case is less clear in the rest of the world. Some economies appear to be immune to the slowdown. Production seems to be gaining momentum in Korea, Thailand and Taiwan, where annual increases rose through 2007 to a comfortable double-digit pace. But others are clearly sliding. Singapore, a bellwether economy for global trade, saw year-to-year industrial production plummet from the 15-20% growth pace to zero in the final half of last year. Things are worse in the Philippines, where declines persisted for most of 2007. India is down from double-digit growth a year ago, to the 7-8% range.
Other economies are somewhere in the middle. Brazil slowed in recent months, although growth is still decent. Malaysia’s production has improved consistently since early 2007, but sales aren’t keeping up: export growth has slowed rapidly, from 10% a year ago to just 3% last December. In China, the same trend may be developing. Production is growing steadily at over 17%. But exports to the U.S., up by a hefty pace in each of the last three years, are just 6% higher. China’s yearly exports to the EU look more respectable, but the trend in recent months has slowed.
The bottom line? The evidence is not complete, but what we do have makes a compelling case for a more staggered slowdown. Given the evidence, there is potentially a lot more slowing up ahead. These days, even the decouplers seem to agree.
Last year, decoupling was all the rage. Sure, the U.S. economy was going flat, but many asserted that the malaise was more or less confined within US borders. But what was loudly proclaimed mere weeks ago has now gone strangely silent. Is decoupling dead, or has it just gone dormant?
The debate centers around sequencing. Our increasingly synchronized, just-in-time world likely led many economy-watchers to expect a more simultaneous slowdown. And when the largest single economy began to falter in mid-2006 with no immediate external effects, hopes of a confined slowdown were kindled. The more optimistic pundits were even more hopeful, confining the slowdown to just one sector of the U.S. economy. But slowdown has spread to other parts of the U.S. economy, perhaps more gradually than expected, casting increasing doubt on decoupling.
Is the slowdown spreading internationally? Industrial production data give us a clue. In the U.S., industrial production has been roughly flat for 6 months. Not only is this further evidence of a generalized slowdown within the U.S., but it comes in spite of a weak-currency-inspired resurgence in exports. But as the U.S. malaise is already well-digested, this is not really a surprise.
What of other countries? First, the developed world. Eurozone production declined in three of the last four months, and between August and December 2007, year-over-year growth fell from 4.6% to just 1.3%. Deceleration is evident in Germany, where growth stalled late last year. Annual growth in France is a fraction of Germany’s, and recent monthly performance has been spotty. Output has been flat in the UK for seven months, while Spain and Italy have recently slid into deep decline. Industrial production in Japan is still growing, but the pace has diminished steadily, to about one-third of its late-2006 rate. This sounds like a lot more than a U.S.-only phenomenon.
The case is less clear in the rest of the world. Some economies appear to be immune to the slowdown. Production seems to be gaining momentum in Korea, Thailand and Taiwan, where annual increases rose through 2007 to a comfortable double-digit pace. But others are clearly sliding. Singapore, a bellwether economy for global trade, saw year-to-year industrial production plummet from the 15-20% growth pace to zero in the final half of last year. Things are worse in the Philippines, where declines persisted for most of 2007. India is down from double-digit growth a year ago, to the 7-8% range.
Other economies are somewhere in the middle. Brazil slowed in recent months, although growth is still decent. Malaysia’s production has improved consistently since early 2007, but sales aren’t keeping up: export growth has slowed rapidly, from 10% a year ago to just 3% last December. In China, the same trend may be developing. Production is growing steadily at over 17%. But exports to the U.S., up by a hefty pace in each of the last three years, are just 6% higher. China’s yearly exports to the EU look more respectable, but the trend in recent months has slowed.
The bottom line? The evidence is not complete, but what we do have makes a compelling case for a more staggered slowdown. Given the evidence, there is potentially a lot more slowing up ahead. These days, even the decouplers seem to agree.
Exporters Beware - The Outlook According to Housing is Gloomy
The following article, by Peter Hall of Export Development Canada, is excerpted from “Canadian Transportation & Logistics”
Housing markets have once again proven their economic prowess. U.S. housing starts fell sharply in mid-2006, fully 18 months ahead of the softening in the broader U.S. economy – a remarkable lead on an economic slowdown that most agree is now going global. So given its foresight, is this keen sage saying anything about impending recovery?
Initially, the plunge in U.S. housing starts was not so bad. From just over 2 million units in 2005, starts fell to the 1.5 million-unit level in late 2006.
That’s a big tumble, but it marked a return to long-term trend levels – an unusually stable outcome…. But the tumble resumed in mid-2007, and by the end of the year had sunk to 1 million units. No sign of a rebound here.
There is some solace in this quick plunge. It stands to reason that the sharper the correction, the quicker the recovery. True, but U.S. housing markets became steadily more bloated in the 2002-06 period. Starts exceeded the population’s basic requirement for new housing by roughly 1.4 million units in five short years. Working this off could easily take another 18 months, even at the current slow pace of building activity...
Other housing activity measures are even less comforting…. As such, the U.S. market now has over 10 months’ supply of houses on the market, a far cry from the stable level of 4.5 months’ supply, last seen in late 2005. Again, not a happy result.
Calculated another way, this is equivalent to over 7 million surplus units on the market – a year’s worth of sales, and in a good year, no less. Given this situation, it is no wonder that the U.S. market is facing the first nationwide decline in housing prices in recent memory.
What is more, there is no clear indication that the U.S. housing market has hit bottom. U.S. consumers were lured into sub-prime mortgages with temporary ‘teaser’ interest rates which upon expiry were reset to higher levels. For the market as a whole, the peak of these resets occurs in the first quarter of this year – suggesting strongly that further fallout is likely.
The implications are gloomy. U.S. consumers are accustomed to using home equity as a ready source of cash. With the housing market in a funk and prices swooning, this pool of liquidity is fast drying up. Other sources of savings – equity markets and bank accounts – have also been found wanting, so the consumer’s only option appears to be curtailed spending, not a pleasant prospect for the world economy. Closer to home, the message for Canadian exporters – particularly of wood products, who face an 11% decline in activity this year alone – is sobering.
The bottom line? The numbers suggest it will be at least mid-2009 before U.S. housing markets begin a meaningful rebound. If this indicator is right yet again, 2008 and 2009 will see slower global growth. Let’s just hope that in the recovery cycle, this sage is not quite so forward-looking.
Housing markets have once again proven their economic prowess. U.S. housing starts fell sharply in mid-2006, fully 18 months ahead of the softening in the broader U.S. economy – a remarkable lead on an economic slowdown that most agree is now going global. So given its foresight, is this keen sage saying anything about impending recovery?
Initially, the plunge in U.S. housing starts was not so bad. From just over 2 million units in 2005, starts fell to the 1.5 million-unit level in late 2006.
That’s a big tumble, but it marked a return to long-term trend levels – an unusually stable outcome…. But the tumble resumed in mid-2007, and by the end of the year had sunk to 1 million units. No sign of a rebound here.
There is some solace in this quick plunge. It stands to reason that the sharper the correction, the quicker the recovery. True, but U.S. housing markets became steadily more bloated in the 2002-06 period. Starts exceeded the population’s basic requirement for new housing by roughly 1.4 million units in five short years. Working this off could easily take another 18 months, even at the current slow pace of building activity...
Other housing activity measures are even less comforting…. As such, the U.S. market now has over 10 months’ supply of houses on the market, a far cry from the stable level of 4.5 months’ supply, last seen in late 2005. Again, not a happy result.
Calculated another way, this is equivalent to over 7 million surplus units on the market – a year’s worth of sales, and in a good year, no less. Given this situation, it is no wonder that the U.S. market is facing the first nationwide decline in housing prices in recent memory.
What is more, there is no clear indication that the U.S. housing market has hit bottom. U.S. consumers were lured into sub-prime mortgages with temporary ‘teaser’ interest rates which upon expiry were reset to higher levels. For the market as a whole, the peak of these resets occurs in the first quarter of this year – suggesting strongly that further fallout is likely.
The implications are gloomy. U.S. consumers are accustomed to using home equity as a ready source of cash. With the housing market in a funk and prices swooning, this pool of liquidity is fast drying up. Other sources of savings – equity markets and bank accounts – have also been found wanting, so the consumer’s only option appears to be curtailed spending, not a pleasant prospect for the world economy. Closer to home, the message for Canadian exporters – particularly of wood products, who face an 11% decline in activity this year alone – is sobering.
The bottom line? The numbers suggest it will be at least mid-2009 before U.S. housing markets begin a meaningful rebound. If this indicator is right yet again, 2008 and 2009 will see slower global growth. Let’s just hope that in the recovery cycle, this sage is not quite so forward-looking.
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