Difficult NAFTA round three set to start in Canada

US Trade Representative Robert Lighthizer, above, along with Canadian Foreign Minister Chrystia Freeland and Mexican Economy Secretary Ildefonso Guajardo Villarreal had said “significant progress” was made at the end of the last round of talks, but no details were released. (AFP)
Updated 22 September 2017
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Difficult NAFTA round three set to start in Canada

OTTAWA: The third round of talks on revamping NAFTA, which start Saturday in Ottawa, are expected to be punishing as diplomatic tensions mount.
Over the course of a week, negotiators will hammer out details of the broad proposals submitted by some 20 working groups during the previous round of talks on the North American Free Trade Agreement (NAFTA) in Mexico City.
US Trade Representative Robert Lighthizer along with Canadian Foreign Minister Chrystia Freeland and Mexican Economy Secretary Ildefonso Guajardo Villarreal had said “significant progress” was made at the end of the last round of talks, but no details were released.
In the meantime, President Donald Trump’s protectionist vitriol and separate trade rows over accusations of softwood lumber and aircraft dumping in the US have deadened many Canadians’ goodwill.
“We won’t do business with a company that’s busy trying to sue us,” said Prime Minister Justin Trudeau, threatening to nix a purchase of warplanes from US manufacturer Boeing after it launched a trade complaint against Canada’s Bombardier.
Canada’s economy, along with Mexico’s, has been bound tightly with the US through NAFTA for the past 23 years.
An Ekos Research poll published this week, however, found that 77 percent of Canadians want their government to walk away from the talks if a “good deal” cannot be secured for Canada.
At the same time, with no substantive progress having been announced on key issues, consulting firms KPMG and Eurasia Group are urging businesses to “start working on backup plans.”
At the start of talks in August, Lighthizer said NAFTA must undergo wholesale revision to fulfill Trump’s goal of reducing bilateral trade imbalances and protecting American jobs.
But his Canadian and Mexican counterparts made clear they view the free trade deal as a success and only want to see it modernized and improved.
All of the parties said they hoped to get an accord by year’s end.
But if they do not show progress in this upcoming round the prospects of reaching a deal could be threatened by campaigning for Mexico’s July 2018 presidential elections and the November 2018 US midterms.
“It will be very difficult for the Mexican authorities to negotiate when the elections are in full swing,” explained Daniel Kerner, head of Eurasia’s Latin America group.
Carlo Dade, a senior fellow in global studies at the University of Ottawa, commented: “Because the NAFTA partners know each other, we all expected negotiations to be accelerated.”
“But the (proposed) timeline was never going to work,” he said, predicting negotiations will drag into 2019.
“You can either do it quickly or do it deeply. You can’t do both, unless the other trading partners simply roll over. And nobody thinks Canada and Mexico aren’t going to push back.”
There are numerous touchy subjects on the table at the NAFTA talks, including America’s demands to scrap its dispute resolution mechanism and change the rules of origin for the auto sector to require a certain percentage of cars’ components be built in the US to remain duty-free.
Canada is also facing pressure over its dairy and poultry supply management.
“The battle is partially at the negotiating table but also out in the congressional districts,” said Dade, noting that both Canada and Mexico lobbied the US Congress hard in advance.
Congress will have the last say on NAFTA, which covers a market of nearly 500 million people.
In the end, if a deal cannot be reached, it would not mean an end to continental trade.
“The strong divisions across the three countries on the key issues is increasing the risk that a deal can’t be reached in the near term,” said KPMG partner Russ Crawford.
“But geography and size of the respective markets — and inertia — will ensure trade flows within North America remain an attractive proposition,” he said.
The end of preferential access to the US market would instead push Canada and Mexico to diversify their export markets — including looking to the EU, Asia and BRIC nations.


Angry Birds maker Rovio needs new games to revitalize sales

Updated 2 min 39 sec ago
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Angry Birds maker Rovio needs new games to revitalize sales

  • Rovio said tough competition and high marketing costs would put pressure on its full-year outlook
  • Rovio grew rapidly after the 2009 launch of the original ‘Angry Birds’ game

HELSINKI: Rovio Entertainment, the maker of the “Angry Birds” mobile game, on Friday said the company needed to come up with new games to drive growth and warned that sales would fall this year after reporting higher third-quarter profits.
The Finnish company, which listed its shares on the stock market in Helsinki last year, reported third-quarter adjusted operating profit of €10.4 million ($11.8 million), up from €4 million a year ago.
But Rovio said tough competition and high marketing costs would put pressure on its full-year outlook. The group said it expected 2018 sales to be between €280 million and €290 million, compared with a previous range of €260 million and €300 million. Last year, the company had revenues of €297 million.
“It is clear that we need new games in order to accelerate growth,” Rovio’s Chief Executive Kati Levoranta said in a statement, adding that the company planned to launch at least two new games next year and had another ten projects in the pipeline.
Rovio grew rapidly after the 2009 launch of the original “Angry Birds” game, in which players used slingshots to attack pigs who stole birds’ eggs. The company expanded into film with an Angry Birds movie in 2016, but more recently has been hit by its high dependency on the Angry Birds brand and tough competition.
After its initial public offering in September 2017, Rovio’s shares dropped 50 percent in February after the company said its sales could fall this year after 55 percent growth in 2017.
Rovio expects a movie sequel to boost business next year and the company has also stepped up investments in its spin-off company Hatch, which is building a Netflix-style streaming service for mobile games.
Full-year core operating profit margin is seen at 10-11 percent, up from a previous view of 9-11 percent.