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.


Goldman Sachs’ second quarter profit up 44 pct; CEO Blankfein to retire

Updated 7 min 47 sec ago
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Goldman Sachs’ second quarter profit up 44 pct; CEO Blankfein to retire

NEW YORK: Goldman Sachs’ profits jumped 44 percent in the second quarter compared with a year ago, driven by the investment bank’s core franchises: advising companies on mergers, acquisitions and other deals, and its trading business.
The New York-based bank said Tuesday that earnings reached $2.35 billion in the second quarter, compared with $1.63 billion a year earlier. On a per-share basis, Goldman earned $5.98 a share, compared with $3.95 a share a year earlier, beating analysts’ forecasts of $4.65 a share.
Separately, Goldman said Chief Executive Officer Lloyd Blankfein will retire as of Oct. 1, and be replaced by David Solomon, the president and chief operating officer. Blankfein has been CEO since 2006.
Nearly all of Goldman’s businesses saw double-digit growth in the second quarter. Trading was particularly strong. Goldman’s institutional client services division, which contains the firm’s trading operations, posted net revenues of $3.57 billion in the quarter, up 17 percent from a year earlier.
Goldman’s trading performance can be fickle, driven by whether the market was volatile that quarter and whether the right sort of securities saw the right sort of movement. Like its competitor Morgan Stanley, which will report results Wednesday, Goldman has been looking to diversify its businesses, moving in recent years into consumer lending and consumer banking.
Goldman’s investment banking business also had a solid quarter, posting net revenues of $2.05 billion, which is up 18 percent from a year earlier. The firm saw both higher underwriting revenue, as well as revenue for advisory services.
The firm’s return on equity ratio, a closely watched performance gauge for banks like Goldman Sachs which measures how much money the bank earned with the money investors have lent it, was 12.8 percent in the quarter. Banks like Goldman try to keep that figure above 10 percent.
Company-wide net revenues were $9.4 billion in the quarter, also beating analysts’ expectations.
Goldman shares fell 0.8 percent to $229.25 in premarket trading.