Dear International Trade and Investment Committee Members,
Here are the international trade and investment articles and publications of interest for the week of August 25 to 31. Daniel Hohnstein has curated this week’s edition. Dan is an associate at Borden Ladner Gervais LLP in Ottawa, practicing primarily in the International Trade and Commercial Litigation Groups.
Top News
- Japan's government lobbied hard for a global pact that limits mercury use and to name the resulting treaty after Minamata, the site of a homegrown industrial disaster from the 1950s when the toxic metal poured into a river, poisoning thousands. But a year after the Minamata Convention on Mercury was agreed in southwestern Japan, Japanese industries from smelters to cement makers are digging in to fight storage costs and emission curbs the still-pending treaty would impose.
- Indonesia's coal industry is pushing the government to roll back new trade rules that it says will drive firms into the ground and rule out any chance of higher shipments next year from the world's top exporter of thermal coal. The rules, intended to rein in illegal operations, force coal miners to register with the central government and make royalty payments upfront before they are allowed to export.
- Exports of ferrosilicon from Venezuela do not harm U.S. producers, the U.S. International Trade Commission said on Tuesday, ending a bid to slap import duties on the products. U.S. producers Globe Specialty Metals and CC Metals and Alloys had lodged a complaint alleging the products, used as an alloying agent in the production of steel and cast iron, were being sold too cheaply in the United States, or dumped.
- The United States is set to slap import duties as high as 17 percent on Mexican sugar in a victory for the powerful U.S. sugar industry but a blow to U.S. candy and soft drink makers who face paying more for the sweetener.
- The worst ever Ebola outbreak is causing enormous damage to West African economies as foreign businessmen quit the region, the African Development Bank said, while a leading medical charity branded the international response "entirely inadequate." As transport companies suspend services, cutting off the region, governments and economists have warned that the epidemic could crush the fragile economic gains made in Sierra Leone and Liberia following a decade of civil war in the 1990s.
- The United States will not go ahead with planned import duties on specialized steel from Japan, Germany and Poland after the U.S. International Trade Commission found the imports were not harming local industry.
- Indonesia wants copper miners Newmont Mining Corp and Freeport-McMoRan Inc to hammer out a deal on concentrate supply for an upcoming smelter before allowing Newmont to resume exports, a mining ministry official said on Wednesday. U.S.-based Newmont, which runs the Batu Hijau copper mine on remote Sumbawa island, withdrew its international arbitration filing against the Indonesian government this week, indicating a possible breakthrough in a seven-month dispute that has halted exports.
- Japan and India will next week agree to jointly produce mixed rare earth, with Japan set to start importing from India in 2015 as it tries to wean itself of its reliance on China, the Nikkei business daily said on Thursday.
- The Philippines is considering re-issuing a buy tender or doing a government-to-government deal for its rice import requirement of up to 500,000 tonnes, after rejecting all offers in a tender that closed on Wednesday because the prices were too high. The imports, originally for arrival between September and November, were meant to beef up state stockpiles and bring down local retail prices. Expensive domestic rice has helped push food price inflation to its highest in more than five years.
- A push to create a yuan trading hub in Canada is gaining momentum as countries around the world race to boost their share of trading in Chinese currency, which has grown dramatically along with China’s economy.
- U.S. producers have lodged a complaint against Chinese imports of steel shelving units, saying the products are subsidized by the Chinese government and sold below fair value in the United States.
- EU lawmakers are threatening to block a multi-billion dollar trade pact between Canada and the European Union — a blueprint for a much bigger EU-U.S. deal — because it would allow firms to sue governments if they breach the treaty.
- India is commissioning a plant to produce up to 5,000 tonnes of rare earths a year, a state company official told Reuters, which could help it contribute about 5 percent to the global supply of the metals used in cameras, cars, iPhones and wind turbines.
- The Canadian and American governments say they're taking another step toward constantly co-ordinating regulatory environments across a broad range of industries. Federal agencies will work with their cross-border counterparts to produce, within six months, public statements explaining how they'll work with industry, and each other, to simplify future regulations long-term for businesses operating in both countries.
- Stockpiles of Canadian wheat and canola swelled by millions of tonnes at mid-summer, the result of farmers' record-large crops a year ago and winter bottlenecks moving them to buyers, according to a Reuters survey of 11 traders and analysts. On Sept. 5 Statistics Canada will report estimates of crop stocks as of July 31, 2014, the end of the 2013/14 marketing year. The report gauges how much crop was in the system ahead of the harvest in the world's No. 6 wheat producer and biggest canola grower.
- Wheat fell for the first time in four sessions on speculation that tensions between Russia and Ukraine won’t disrupt the global grain trade. Corn and soybeans slid as rain aids U.S. Midwest crops. Wheat futures through yesterday rebounded 10 percent since touching a four-year low on July 29 as the conflict in the Black Sea region escalated. World production will rise to a record 713.4 million metric tons in the 2014-15 season, 1.6 percent more than estimated in July and topping the prior year’s harvest of 712.5 million tons, the London-based International Grains Council said today in an e-mailed report.
- Traders may ship Thai raw sugar equivalent to 16 percent of the global surplus against the October contract on the ICE Futures U.S. exchange, the first deliveries from the Asian nation since 2012. About 625,000 metric tons of the unrefined sweetener will be delivered when futures expire, according to the median of six estimates in a Bloomberg survey of analysts and traders. The forecasts, from companies including Green Pool Commodity Specialists and UBS AG, ranged from 300,000 tons to 2 million tons. The global surplus will be 4 million tons this crop year, according to the International Sugar Organization.
- A U.S. judge on Friday dismissed antitrust litigation accusing Wall Street banks and commodity merchants including Goldman Sachs Group Inc and Glencore Plc of conspiring to drive up aluminum prices by reducing supply.
Other News of Note
- China's foreign investment mix is changing, with portfolio investors buying more stocks but foreign direct investment falling to a two-year low on a slowing economy, rising business costs and anti-monopoly probes and crackdowns on foreign firms. Foreign direct investment (FDI) in China fell in over the first seven months of 2014 compared with a year earlier, while the offshore funds flowing into mainland stocks hit the highest in more than two years last month.
- Saskatchewan Premier Brad Wall is threatening retaliatory measures against Ontario if it doesn’t drop protectionist rules that favour local firms bidding for infrastructure contracts, complicating provincial efforts for freer trade across the country.
- The Renley Watch Manufacturing Company is one of the companies that helped coastal southeastern China displace Switzerland as the center of the world’s watchmaking industry. But now Renley, like many watchmakers, is mulling whether to move far into China’s interior.
- Guanghui Energy Ltd., a Shanghai-listed (600256) explorer with overseas oil assets, became the first non-state company this year to be allowed to import crude as China’s government opens resource-rich Xinjiang to private investment. The oil unit of the Urumqi, Xinjiang-based company gained approval to import 200,000 metric tons of crude this year, according to a statement to the Shanghai Stock Exchange yesterday. Xinjiang, with about a quarter of China’s onshore crude reserves and almost 30 percent of its natural gas, may introduce policies to open resources to private and foreign investors, two company officials said earlier this month.
- Britain's economy looks set to grow at its fastest rate since 2007 this year, but the rapid pace is unlikely to be sustained, the British Chambers of Commerce said on Wednesday after nudging up its growth forecasts for this year and next. The BCC said it expected Britain's economy to grow by 3.2 percent this year and by 2.8 percent in 2015, up from forecasts of 3.1 percent and 2.7 percent three months earlier and a little above economists' average forecast in a Reuters poll. Britain's upturn contrasts with a stagnant euro zone.
- The U.S. economy rebounded more strongly than initially thought in the second quarter and details of a report on Thursday pointed to sustainable underlying strength. Gross domestic product expanded at a 4.2% annual rate instead of the previously reported 4.0% pace, the Commerce Department said, reflecting upward revisions to business spending and exports.
- Canada's current account deficit in the second quarter narrowed slightly to C$11.87 billion ($10.89 billion) on stronger investment income, Statistics Canada said on Thursday.
- The premiers of Canada’s three western provinces announced Thursday they’re going to review the remaining trade barriers between them as part of their New West Partnership. Saskatchewan Premier Brad Wall said while the deal between his province, Alberta and British Columbia has made progress on easing the movement of goods and services across borders, more work can be done.
- Six years after being struck by economic crisis, Europe is facing a fresh downturn, with few new ideas on the table for reigniting growth and deepening political divisions over the austerity policies that many blame for worsening the malaise.
- Canada’s economy picked itself up after being knocked down at the start of the year, as household spending and exports powered the strongest quarterly economic expansion in over two years. Gross domestic product accelerated to an annual growth rate of 3.1 per cent in the second quarter, faster than Bay Street was expecting and a big improvement on the meagre 0.9-per-cent advance posted in the first three months of the year.
- Even before most people had their first morning cup of coffee, Saskatchewan Premier Brad Wall and British Columbia’s Christy Clark were outlining a new deal to open up their borders to the free-flow of wine and craft spirits, including Saskatchewan’s dill pickle vodka.
- A U.S. judge on Friday dismissed antitrust litigation accusing Wall Street banks and commodity merchants including Goldman Sachs Group Inc and Glencore Plc of conspiring to drive up aluminum prices by reducing supply.
- India’s economic growth accelerated to the fastest pace in more than two years, beating estimates, after the central bank refrained from raising interest rates. Gross domestic product rose 5.7 percent in the three months ended June from a year earlier, the biggest gain since the quarter through March 2012 and compared with the 4.6 percent in the previous quarter, the Central Statistical Office said in a statement in New Delhi yesterday. The median of 48 estimates in a Bloomberg News survey was for a 5.5 percent gain.
Government Announcements/Press Releases
- Today, The Honourable Christian Paradis, Minister of International Development and La Francophonie, chaired the first meeting of the Redesigning Development Finance Initiative (RDFI) Steering Committee, a joint global project between the World Economic Forum (WEF) and the Organisation for Economic Co-operation and Development’s Development Assistance Committee (OECD-DAC).
- The Honourable Ed Fast, Minister of International Trade, today kicked off a trade and development mission to Laos and Burma from August 26 to 29, 2014, to continue to build stronger economic ties with the region and with the Association of Southeast Asian Nations (ASEAN).
- The European Commission has adopted a "Partnership Agreement" with the Czech Republic setting down the strategy for the optimal use of European Structural and Investment Funds throughout the country. Today’s agreement paves the way for investing €22 billion in total Cohesion Policy funding over 2014-2020 (current prices, including European Territorial Cooperation funding and the allocation for the Youth Employment Initiative). The Czech Republic also receives €2 billion for rural development and €31 million for the fisheries sector.
- The Third ASEAN Economic Ministers (AEM)-Canada Consultations were held on 27 August 2014, in Nay Pyi Taw, Myanmar. The Consultations were co-chaired by H.E. Dr. Kan Zaw, Union Minister for National Planning and Economic Development, Myanmar, and the Honourable Ed Fast, Canada’s Minister of International Trade.
- The Honourable Ed Fast, Minister of International Trade, today highlighted ongoing economic, trade and diplomatic relations with member countries of the Association of Southeast Asian Nations (ASEAN) at the conclusion of his four-day trade mission to Laos and Burma.
- The European Commission has announced today that it will open Private Storage Aid for butter, Skimmed Milk Powder (SMP) and certain cheeses in order to alleviate the impact of Russian restrictions on imports of EU dairy products and to limit the negative effects on the internal market. The Commission has also confirmed that the period for public intervention of butter & SMP will be extended until the end of the year.
- The European Union today took an important step towards creating a comprehensive EU investment policy, with the publication of a Regulation setting out a new set of rules to manage disputes under the EU's investment agreements with its trading partners. The rules – set out in the Regulation on financial responsibility under future investor-to-state disputes – are a necessary component of a common EU investment policy.
- In August 2014 the Business Climate Indicator (BCI) for the euro area remained broadly flat (at +0.16) compared to July (+0.17). Managers' more optimistic appraisals of past production and, to a lesser extent, export order books were offset by a marked decrease in their assessment of expected production. Managers' views on the level of stocks of finished products and overall order books remained broadly unchanged.
- In August the Economic Sentiment Indicator (ESI) fell in the euro area (by 1.5 points to 100.6)1 and the EU (by 1.2 points at 104.6).
- The fall in economic confidence in Europe in August, particularly among industry and consumers, is not a surprise following the disappointing second quarter growth figures and the geopolitical tensions that have marked this summer. It nonetheless is a source of concern: without confidence, we will not see the pick-up in investment we need for a more robust recovery in growth and employment.
- The European Commission has adopted a "Partnership Agreement" with Hungary setting down the strategy for the optimal use of European Structural and Investment Funds throughout the country. Today’s agreement paves the way for investing €21.9 billion in total Cohesion Policy funding over 2014-2020 (current prices, including European Territorial Cooperation funding and the allocation for the Youth Employment Initiative). Hungary also receives €3.45 billion for rural development and €39 million for fisheries and the maritime sector.
- At today’s meeting in Moscow with Russian Energy Minister Alexander Novak, Vice-President of the EU Commission GĂĽnther H. Oettinger reiterated his proposal to have an interim solution including an interim price.
- Maria Damanaki, Commissioner for Maritime Affairs and Fisheries, stated after her meeting with Mr Verstergaard, Faroese Minister for Fisheries: “[…] We discussed a challenge that we are facing in all European sea basins, be it here in the Mediterranean region or in the North East Atlantic: we need to get back to healthy fish stocks in Europe. Whereas the situation in the Mediterranean is alarming, with more than 90% of the stocks overfished, a lot of work also needs to be done in the Atlantic where fish stocks are slowly recovering.”
- The WTO Secretariat has circulated a meeting notice and list of items proposed for the next meeting, on 29 August 2014, of the Dispute Settlement Body, which consists of all WTO members and oversees legal disputes among them. The meeting notice is circulated in the form of a document officially called an “airgram”.
- David Anderson, Parliamentary Secretary to the Minister of Foreign Affairs, will travel to Apia, Samoa, to participate in the Third International Conference on Small Island Developing States (SIDS) from September 1 to 4, 2014. This will be the third time Canada has participated in an international conference focusing on the unique challenges and special vulnerabilities of small island developing states, demonstrating Canada’s commitment to supporting the sustainable development efforts of SIDS.
- The Honourable Leona Aglukkaq, Minister of the Environment, Minister of the Canadian Northern Economic Development Agency and Minister for the Arctic Council, will attend the founding meeting of the Arctic Economic Council (AEC) in Iqaluit, Nunavut, on September 2 and 3, 2014. The creation of the AEC is a priority initiative during Canada’s 2013-2015 Arctic Council chairmanship, which is focused on development for the people of the North.
Commentary
- The boom in U.S. petroleum production has led to an increasing clamour to overturn the ban on U.S. oil exports, a relic of the terrible energy policies of the 1970s. The current agitation for exports is of more than passing interest to the Canadian oil industry, whose sales to the U.S. suffer a heavy discount due a combination of the U.S. boom and political hurdles to new pipeline construction.
- François Hollande, the president of France since 2012, coulda been a contender. He was elected on a promise to turn away from the austerity policies that killed Europe’s brief, inadequate economic recovery. Since the intellectual justification for these policies was weak and would soon collapse, he could have led a bloc of nations demanding a change of course. But it was not to be. Once in office, Mr. Hollande promptly folded, giving in completely to demands for even more austerity.
- There seems to have been some nibbling around the edges of interprovincial trade barriers – the removal of which Federal Industry Minister James Moore has highlighted as one of Ottawa’s top priorities — at the Provincial Premiers’ meeting in Charlottetown this week. Further discussions, and even some announcements, are expected on Friday. However, the Council of Confederation has inevitably been dominated (as usual) by complaints over the alleged “fiscal imbalance,” whereby the Feds burnish their budgets at the expense of provincial transfers for health and infrastructure.
- Saskatchewan Premier Brad Wall is right when he says that Ontario’s protectionist rules favouring local firms in government contracts are unfair to industries in other provinces. He could have easily added that Ontario is also hurting itself with these policies.
- Europe is pulling apart just when it needs to be coming together to cure an apparently chronic case of stagnation. The opposing forces – the calls for greater integration offset by the calls for greater autonomy, even a return to national currencies – can only push Europe deeper into the economic hole.
- On the first day of the annual meeting of the Council of the Federation, held this year in Charlottetown, P.E.I., the Group of Politicians Formerly Known as The Premiers posed for a photograph in the style of that famous photo of the Fathers of Confederation, taken on the same spot 150 years before.