News & Updates

    The Morning Brief - 11.29.18

    Posted by Bruce Carson on Nov 29, 2018 7:57:38 AM


    Economy—Comments on the USMCA and probable Signing—Premier Notley Comes to Ottawa;  dealing with the Price of Oil and getting it to Market


    Late yesterday Prime Minister Trudeau left for the G20 meeting in Argentina. Sometimes, as with this summit, meetings like this come at a convenient time for leaders. Such is the case for Prime Minister Trudeau who may have had extra spring in his step yesterday as he headed south. While these summits can from time to time be stressful, there is no daily question period except for intermittent media availabilities, but on these trips, this seems to be something that Trudeau handles with little difficulty.

    The point is that the day to day issues are for the most part left behind in Ottawa. Yes, whether it is on the schedule or not there will be conversations with President Trump about USMCA and General Motors and the GM Oshawa plant closure, where Trudeau is taking a softer approach than Trump and Gerry Diaz of Unifor.

    It will also be hard for the G20 group to ignore Saudi Arabia’s presence at the meeting and the murder of journalist Jamal Khashoggi will be discussed. Canada’s position on this has yet to be solidified so Trudeau should be ready for questions from media. Also the latest skirmish between Ukraine and Russia may be discussed as it seems to be a natural issue given Russia’s invasion of the Crimea.

    Escaping from the daily grind of Ottawa means that the prime minister for a couple of days can perhaps avoid questions on getting Alberta oil to market, GM’s plant closure, what did he know and when did he know it about Raj Grewal’s gambling issues and police investigation and a new issue coming from a Parliamentary Budget Officer Report to be released this morning dealing with the costs of irregular migration across Canada’s southern border. It would be rare that a report about such a topical issue would contain good news for the Trudeau government.

    So while there may have been a spring in Trudeau’s steps getting on the plane it is quite possible that will not be the case on the return trip. Sometimes it would nice to think about spending an extra day in such a sunny, warm climate.

    Comments on the USMCA and Probable Signing

    Since Monday’s announcement by GM, commentators have been canvassing around for someone to blame for the pending closure of the Oshawa plant. Kevin Carmichael in an article in the National Post sets out that the problem may be us and the way Canada approached the trade negotiations. In an article entitled “So, how do we feel now—was the USMCA deal a win for Canada?” he sets out that Diaz on October 1, when it was finalized was quite pleased saying that uncertainty around some of the economic factors that impact Canadians have really been resolved.

    But as the three countries were negotiating such matters as cars and diary, GM was playing a more strategic game looking at medium term and long term needs; SUVs, electric vehicles and autonomous driving cars. David Patterson of GM is quoted as saying that if they did not do that “there won’t be any jobs.” 

    Carmichael argues that the parties should have been looking at filling the 500,000 jobs that are on the market. He states that the focus should have been on the ‘ideas economy’ and labour shortage and how Canada can get a greater share of those jobs.

    A CP article sets out that GM was preparing itself for the future “trying to get ahead of the technology curve.” GM is focussed on three high tech trends: 1) electronic vehicles; 2) ride sharing apps and 3) cars and trucks that are capable of driving themselves.

    Janyce McGregor writing for quotes Foreign Affairs Minister Freeland saying that “the car industry now has stability to grow and thrive.” It would seem in this world full of uncertainty that ‘stability’ is an elusive concept.

    At some point tomorrow the trade agreement should be signed in Argentina. Outstanding as of now is the revocation of steel and aluminum tariffs and the side letter dealing with auto tariffs.

    Premier Notley comes to Ottawa dealing with the Price of Oil and getting it to Market

    Premier Notley’s speech in Ottawa yesterday dealt with three matters; 1) oil by rail, 2) complete overhaul of the government’s new environment act, Bill C-69 and repeal of the prohibition of oil tanker traffic off the coast of B.C.

    On crude oil by rail, Notley would like the federal government to partner with Alberta, particularly as it involves interprovincial carriage of natural resources. This will be an expensive proposition involving capital and operating costs as well. She has received some assurances about changes to Bill C 69, but she wants to see them set out in the regulations.

    In the next couple of weeks she will make a decision as to whether to limit output of oil. Times have changed considerably since this was implemented in the early 80s by Premier Lougheed. While opposition leader Jason Kenney has recommended a 10% reduction, this is very slippery slope for free marketers to go down. Having government as a partner on oil extraction may sound good but does it give too much control over to government?

    Peter Tertzakian writing in the Financial Post says that a decision on this matter should be made soon before the winter drilling season is lost.

    To Come

    --today, Prime Minister Trudeau in Buenos Aires

    --today, Premier Notley delivers a speech in Toronto

    --today, PBO releases a report on the costs incurred at Canada’s southern border dealing with irregular asylum seekers

    --November 30, GDP for September and Q3 to be released

    --November 30-December 1, G20 meeting in Argentina

    --December 3-13, COP meeting in Poland

    --December 3, OPEC meets to deal with oil output

    --December 5, Bank of Canada deals with interest rates

    --December 7, First Ministers Meeting on the Economy in Montreal—will Indigenous leaders be invited to participate?

    The Morning Brief will return next Monday or Tuesday depending on travel issues--bc

    Topics: Morning Brief

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