Michigan's Right to Work Legislation Sends Ripples into Ontario

It looks like Michigan, in less than 4  7 days, will go from a union-state to a right-to-work state. 

While you can check out coverage of the controversial move by the Michigan GOP, iPolitics offers an interesting Canadian labor take on the news:

As key auto industry jurisdictions, Ontario and Michigan are already in competition for jobs and investment. Now, from the perspective of companies looking to open or expand, Michigan will have an advantage.

This could bolster Ontario PC leader Tim Hudak’s case to implement right-to-work in the province, Moffatt said

...

Lewenza intends to speak with his UAW counterpart, Bob King, about the developments and added that the CAW would participate in any mass demonstrations in Michigan.

“I know that I would be the first one to respond to a call and ask CAW members to participate because I do believe an attack on workers, regardless of border, is an attack on the labour movement more generally.”

Are Canada's Economic Fortunes Turning? Putting Q3 Numbers in (Some) Economic & Policy Context

By Keith Edmund White, Editor-in-Chief

iPolitics and WSJ offer an illuminating one-two punch on the Canadian economy, both--in different ways--putting Canada's not-so-thrilling economic numbers in context. The big economic question:  Is Canada's energy-heavy and (now fading) housing market boom finally weighing down Canada's phenomenal post-08 financial crisis economic performance?  Well, let's start with the snap numbers, and then review the WSJ take.  And when it comes to the policy impact of this news, particularly Canada's relationship with the United States, CBC's report on a confidential Canadian foreign policy report gives some helpful input.  So, with introductions out of the way, let's warm-up that cooling coffee with a Canadian economic web round-up!

iPolitics reports on Canadian third quarter 2012 blues, and America's economic uptick:

“Canada’s economy in the third quarter succumbed to a litany of lapses,” says CIBC World Markets economist Emanuella Enenajor, citing government austerity and weakness in trade, energy shipments, housing, and business investment. CIBC projects the quarterly economic report card Friday will reveal growth slowed dramatically to an anemic annual pace of just 0.5 per cent from 1.9 per cent in the second quarter.

On the other hand, America is enjoying what has typically been Canadian luck in the years following the 2008 financial crisis:

In contrast to Canada, the US economy is picking up steam, with Scotia Capital economists projecting growth third quarter growth there will be upwardly revised Thursday to a relatively robust 2.7 per cent annual pace from the initial 2.0 per cent estimate.

Oh, and let's not ask about the EU:

“In terms of the global third quarter growth scorecard, it looks like the US has picked up some momentum, Canada is slowing down and the European Union is in outright recession,” says Scotia Capital economist Derek Holt. 

So, should Harper be breathing a deep sigh of relief that Canada's electoral system has bought him three plus years to ride out the storm? Well, maybe.

From WSJ:

Most economists say Canada can ride out the storm. But this trade-dependent nation—far less scarred by the recession than its larger neighbor to the south—is suddenly looking vulnerable, just as a number of indicators suggest brighter days ahead for the U.S.

While the recession laid global peers low, Canada's strong bank balance sheets funded continued consumer spending during the recovery. Years of that easy credit in turn helped give rise to a housing boom that has underpinned an economy already benefiting from another surge—in commodity prices.

Today, global commodity prices are weakening, and home prices in some of Canada's hottest markets are leveling off or falling. Canadian households, meanwhile, are as leveraged as they have ever been after years of extremely low interest rates. Since September 2010, the Canadian central bank's benchmark interest rate has been at 1%.

It's no surprise then that Canadian policy makers are pushing increased trade as a way to prop up Canada's declining economic performance.  The solution: expand Canadian access to emerging markets, particularly Asia.  From last week's CBC News report showing revealing a "confidential government document" that urges Canada is expand trading opportunities, even if this means pursuing economic deals with countries "where political interests or values may not align":

A confidential government document obtained by CBC News warns the Harper government has been slow to open new markets in Asia, leaving Canada firmly tied to the troubled U.S. economy for a long time to come.

The document prepared by Foreign Affairs and dated Sept. 6 is a draft of a highly classified new "Canadian foreign policy plan" the Conservative government has been preparing for more than a year.

The draft briefing paper for the federal cabinet states: "We need to be frank with ourselves — our influence and credibility with some of these new and emerging powers is not as strong as it needs to be and could be.

"Canada's record over past decades has been to arrive late in some key emerging markets. We cannot do so in the future."

The Harper government itself took the slow road to China.

So, good news:  An American recovery could help lift Canada, both in manufacturing and likely increase in energy demand.  Downside, a slopping EU isn't going to help matters on either front, and something should be done about that housing trouble--beyond the superficially appealing solution of privatizing Canada's Housing and Mortgage Corporation. 

Canada-China Bilateral Investment Treaty: Smart Stepping Stone, or Bad Deal for Canada?

By Keith Edmund White 

Editor-in-Chief

Two reports on iPolitics show the interesting tug-of-war over the policy wisdom of the Canada-China Bilateral Investment Treaty (BIT).  (Note:  These type of treaties are also called Foreign Investment Promotion and Protection Agreements or FIPAs.)  In short, it's clear Canada is not getting an even deal with China on investor protections.  But, in return, Canadian businesses may be rewarded with greater access to the Chinese market in the future.  And in a time where international competition for China is stiff, and the strong role of the Chinese government in the Chinese economy, Canada may (1) have gotten the best deal it could and (2) be effectively playing the trade long-game.

iPolitics brings out Scott Sinclair’s concerns over the Canada-China BIT.  Summed up, Sinclair laments the lack of debate over—let alone public knowledge—the deal.   Here are Sinclair’s concerns, boiled down:

• Not Reciprocal on its Face. The big trade-off?  Performance requirements on foreign investments.  China “can continue to impose conditions on foreign investors, such as requirements to use local suppliers, take local business partners, train local workers and management, and transfer technology.”  Under NAFTA, Canada is already boxed out of this.   The lingering question?  Why would Canada negotiators give China such a considerable gimme? 

• Is investor-state arbitration really an equal benefit to Canadian investors in China and Chinese investors in Canada?  With “the persuasive role…of the Chinese government in all facets of its economy, it would be a brave or foolhardy Canadian investor would invoke investor-state arbitration against the Chinese government.” 

• Chinese investors could take Canadian environmental regulations to arbitration.

• Weaker transparency requirements for arbitration rulings. 

So, the big question:  Why is the Harper government so pumped to push the deal through?   It may be the first step to a bigger deal between Canada and China.  iPolitics gets some great China-Canada BIT context from John Bosariol, one of the authors of a great primer on the deal.   In short, Bosariol talks up just getting China to agree to arbitral tribunals and suggests that the China-Canada BIT could open the door to a larger agreement down-the-road:

In other words, the investment treaty is really just a stepping stone to something larger — potentially dealt with in a free trade agreement — though Minister Fast said on Monday that it’s a little early to start talking about that.

“When that happens, you’ll see that we’ll have an investment chapter in that agreement and that’ll supersede this. But still the principle here that China has opened itself up to being sued in front of an independent arbitral tribunal — I think is a big step for Canada.” 

Unsolicited and perhaps simple insight on trade negotiations with China:   with China’s market is so much bigger, and sought-over by other nations, it seems clear any trade deal—whether on investments only or on bigger trade deals—will always be slightly titled in China’s favor. 

But the DeSmogBlog.com does show the regional aspect of this investment deal in Canadian politics.  Osgoode Law Faculty member Gus Van Harten notes that this deal isn't really designed for Canadian manufacturers (read:  think Ontario and Quebec), but rather for Canadian energy producers (read:  Alberta).  Naturally, the Conservative Party finds its greatest strength in Canada's central region--so it's no surprise that the party's economic growth plan would be pegged to the energy economy, which can often be at odds with pro-manufacturing policies.  From Carol Linnet's excellent series of interviews with Gus Van Harten:

Yes, I mean, it’s pretty clear that the Harper government does not have as its priority support for the established manufacturing sector, and that its higher priority is to get investments into the resource sector to get the resources out of the ground and generate economic activity in that way. It’s not a bad short-term strategy if you want to create some growth, but as a long term strategy it’s not good because it puts too many of our eggs in one basket. And because resource prices are notoriously unreliable, and finally because if the resource extraction activities are owned by foreign companies, then over the long term they will be earning the profits from the exploitation of our resources rather than Canadian companies. (Note:  Emphasis taken from the original posting.)

But, then again, there's another way to look at this.  Canada wants access to China's market.  What does Canada offer China?  Energy.  So Harper is opening the door with the carrot, in hopes of getting a more balanced deal in the future.  Is this the right way to go?  For a middle power like Canada it seems like, overall, yes.  Now on the particulars of the deal, could Canada have gotten a better deal?  Well, that's for a post-Harper government policy book that explores, with the actual decision-makers, the Harper government's trade and economic strategy.  (Shameless plug:  I, for one, would be thrilled to help put together such a work!)

In any case, CUSLI-Nexus gives props to iPolitics and DeSmogBlog.com for bringing some needed attention to the China-Canada BIT/FIPA.

CUSLI's Big Week & Monday Morning News Round-Up

Happy Monday, readers!  We've got an action-packed week ahead for you:  Arctic races, student loans, the PQ's environmental and energy strategy in Quebec, bad meat, Laurentian consensus (say what?), a CUSLI-Nexus first, and more...

First, an Amazing Week of Original CUSLI-Nexus content:

• The Arctic Race.  A new staff writer will make his premiere by discussing the race for Arctic resources: who's up, who's down, and can there even be a winner?
• Student Loan Discharge, the Canada-U.S. Divide.  Senior Editor Justin McNeil will be looking at the discharge of student loan debt, and why America should probably look at Canada's approach.
• Conversations with CUSLI-Nexus.  A CUSLI-Nexus first!  We'll be launching our first installment of 'Conversations with CUSLI-Nexus' (yes, we're happy to take suggestions on a better title).  What's that mean?  We'll be posting a fantastic interview with a leading voice in the Canada-U.S. bilateral relationship.  Want to know more?  Tune in later this week!
• News-tracker.  And, as always, CUSLI-Nexus will be tracking the best in news and commentary at our Facebook Page and Twitter feed, both of which you should follow--or check out through the blog by looking to your right.   

Added Bonus:  A Monday Morning News Round-Up:

• Our friends at Beyond the Border Observer, as usual, have some great stuff you should check out.
• Conservatives had a tough week with the XL Meat Crisis in Alberta.  From MedicineHatNews.Com:

"When a senior civil servant speaking on the biggest food recall in the country's history is gagged — in a way that was likely humiliating to himself — it should be noted."

• Today's Canadian Thanksgiving!  To our Canadian readers, welcome back to the work-week!  For our American readers, learn more courtesy of Detroit Free Press.
• Oh, wait:  Let's not forget Columbus Day:  the day Columbus proved the world was round by discovering America...or...the day Columbus landed in Venezuela; thought it an island; and proved affirmed educated European's belief in a round planet! 
• Hello Post-Laurentian Conservative Consensus!  No idea what that means?  Check out this iPolitics article by Zach Paikin.  What?  Too busy sipping the morning java or tea?  OK, OK, we'll give you a crib sheet:

• Laurentian Consensus:  "From the time of Confederation until quite recently, the direction of this country was determined by the political, academic, cultural, media and business elites in Toronto, Ottawa, Montreal and other cities along the St. Lawrence River or its watershed."  (Source:  Globe and Mail's John Ibbitson, Literary Review of Canada, Dec. 2011.)   
• Two nerdy side-notes:  (1) John Ibbitson and U of T political scientist David Cameron take "joint ownership" of the term--such a Canadian solution!; (2) Laurentian refers to the Great Lakes region, you can learn the geological aspect of the term here--and even learn about its linguistic nuance here!

• Post-Laurentian Consensus:  The Grits, smelling the westward shift, (i.e. the Liberal Party) are now moving right and westward themselves, according to Zach Paikin.  "Slow growth projected for years to come only makes it more likely that a future Liberal leader will look right and not left — as Michael Ignatieff did — for votes."

• Is Zach right?  Well, maybe, unless--of course--the NDP wins the next federal election.  Also, Canada's three consecutive Conservative Harper governments are the result of two opposition parties whose supporters aren't against them running as a coalition.   (Though, it seems no such deal, for now, is in the cards.) But, hey, now you can throw around 'Laurentian Consensus' when having high tea.

• Anne-Catherine Boucher and Charles Kazaz map out the energy and environment platform of the new PQ government in Quebec.  The PQ has new ideas on land rehabilitation, GHG, and mining royalties; wants to shut down shale gas development; and we're still waiting for "the PQ's vision for Plan Nord...."  Overall, industry is not thrilled; but, the PQ's minority status makes compromise the name of the game.
• And, finally, whether you love or hate his political leanings, Gerry Nicholls's humor is anything but dry.  His victim last week?  Justin Trudeau:

Justin Trudeau campaign itinerary:

Oct. 8 – Thanksgiving Day – Visit farm near Montreal -- raise turkey from the dead.

Will Trans-Pacific Partnership Talks Update or Downgrade NAFTA?

By Keith Edmund White, Editor-in-Chief

New Zealand's trade minister thinks Trans-Pacific Partnership (TPP) trade talks could be a springboard for opening up NAFTA.  Is he right?  CUSLI-Nexus looks at how TPP talks could update NAFTA, but then asks the tough trade question:  do bilateral and regional free trade agreements help international trade, or do they just kick the can on the big divides within the international trading system?  Thanks to iPolitics, Rabble.ca, Skynews.com.au, and Tax-News.com from their excellent reporting that stretches from Toronto to Singapore.

On Monday, New Zealand’s trade minister—at a convention hosted by the Canadian Council of Chief Executives—“said the TPP [Trans-Pacific Partnership] talks could allow negotiators for Canada, the United States and Mexico to update the 18-year old NAFTA deal.”

How would TPP update NAFTA?  From an excellent iPolitics report by Elizabeth Thompson:

In an interview with iPolitics following his speech, [NZ trade minister Tim] Groser said changes to NAFTA wouldn’t be part of the formal TPP agenda but the TPP agreement could trump NAFTA provisions the same way NAFTA superceded the original Canada-U.S. free trade deal.

So what is there to update in NAFTA? U.S. chicken and dairy sectors want more access to the Canadian market, with other U.S. industries wanting to keep pushing Canada on strengthening their intellectual property regime. From a Rabble.ca Wednesday article reviewing the lingering Canada-U.S. trade barriers in the NAFTA-era:

U.S. industry groups, including the main poultry and dairy associations, complained about Canada's supply management policies and intellectual property regime during a Monday hearing at the United States Trade Representative on Canada's entry to the ongoing Trans-Pacific Partnership trade negotiations. Meanwhile, in its presentation to the USTR, the AFL-CIO urged the U.S. government to incorporate "a new approach to trade policy, one that prioritizes benefits for working families, not simply benefits for multi-national or global enterprises (MNEs)."

Reuters reported Monday that the U.S. dairy and chicken sectors are sore they never received access to Canada's market as promised in NAFTA. High tariff walls and low quotas prevent exports of these goods from any country from flooding the Canadian market, which is supplied mainly by Canadian farmers and farm production.

Now getting a TPP agreement is by no means a sure thing.  From an excellent article in today’s SkyNews.com.au emphasizing that 2013 will be the make-or-break year for TPP:

While it's believed around half of the TPP's 29 chapters are finished, Australian Trade Minister Craig Emerson concedes most of the low-hanging fruit has been picked.

'It'll be 2013 when the big negotiations on the hard issues are conducted,' Emerson told AAP on the sidelines of the APEC Summit in Russia this month.

Emerson points to market access as the toughest nut to crack.

And, of course, what about the macro-question:  Do ‘small’ regional trade pacts or possibly ‘big’ regional trade pacts like TPP good or bad for encouraging a free-flow of trade world-wide?  From this there’s perhaps no better—if perhaps biased—source than Pascal Lamy, the Director General of the World Trade Organization (from today’s Tax-News.com):

While noting that the increased negotiation of regional trade agreements has contributed to freer trade, he drew attention to the fact that regional trade agreements have sprung up due to an impasse in global free trade talks under the auspices of the Doha Development Agenda.

He reiterated that on average, each member of the WTO belongs to no fewer than 13 separate preferential trade agreements. "This means that in addition to their multilateral commitments, WTO members on average have to manage an additional 13 separate trade regimes. I do not think you will disagree with me that this cannot be the most efficient way to trade and to do business across national frontiers."

In addition, Lamy—talking at a Singapore event hosted by the European Chamber of Commerce—lists five drawbacks of pursuing free trade agreements (FTAs) on a bilateral and regional level, skipping over WTO talks:

• FTAs create trade costs:  multiple, overlapping trade pacts create their own trade costs.

• New FTAs undermine old FTAs.  Newer FTAs-instead of building on past ones--lower of the value of existing trade pacts.

• The FTA box-out factor:  If you’re not in the FTA club, the FTA is—in effect—now a trade barrier to non-members.

• FTAs reward procrastination:  Countries are selectively picking how to pursue free trade, skipping over tougher issues, which mainly impact smaller, weaker members of the world trading system.

• FTAs Undermine WTO consensus:  the more bilateral and regional FTAs you make, the harder it can be to get countries to agree to world-wide agreements on trade.

Naturally, there's an easy rejoinder these concerns:  let's have freer trade where we can have it. 

In any case, international trade may be the big, under-reported story of 2013.  And it will be interesting to see if TPP can be finalized, and what impact a finalized TPP agreement--a trans-Pacific trade pact that would exclude China--might have on trade disputes between China and the United States, and--from that--on divisions at the WTO.