As Canadians, we’ve actually seen this troubling picture before. It was back in the summer of 1971, when the Republican administration of Richard Nixon imposed a 10 per cent special “surcharge” on all (nonresource) imports entering the United States. It became known in Canada as the “Nixon shocks.”
Not surprisingly, this development sent enormous shockwaves throughout official Ottawa. Many in the Pierre Elliott Trudeau government assumed it must have been an oversight or a mistake by an illinformed Nixon White House.
There was talk of massive job losses in Canada, the need for government programs to assist the unemployed and it stood as a stark reminder that Ottawa’s “special relationship” with Washington had run its course.
Canadian officials were subsequently dispatched to Washington to set their U.S. counterparts straight. There was a general consensus amongst the delegation that once the Americans were briefed on the importance and integrative nature of the two economies, the Nixon administration would come to its senses and swiftly exempt Canada (as it had done in the past) from this punitive measure.
What they discovered to their horror was that Canada was specifically targeted by official Washington. U.S. officials were apparently angry with a onesided Canada-U.S. Auto Pact, unwelcome noises about placing restrictions on U.S. investment in Canada and a growing bilateral trade deficit.
The big brains in the Trudeau government were at a loss as to how to get the Americans to cancel the surcharge. Any thoughts of retaliation against the U.S. were seen as dangerously counterproductive and promptly dispensed with. Diplomacy (at both the bilateral and multilateral levels) would be the order of the day — and especially working closely with our European friends to plead our collective case.
As it turned out, President Nixon relented, largely because of Japanese currency alignment, European pressure and an improving U.S. balance of payments situation, and scrapped the measure in December of 1971.
Today, Prime Minister Justin Trudeau faces the ominous prospect of another Republican President, Donald Trump, embracing “Buy America” provisions, dismantling the NAFTA and imposing a 20 per cent “border adjustment tax” on Canadian imports. The fulfilment of any one of these moves would spell very bad news indeed for Canada.
Of course, Canadians are well aware of the stakes here: we export roughly 75 per cent of everything that we produce to the U.S. marketplace. It is the largest bilateral trading relationship in the world. Indeed, the U.S. market comprises something like 16 per cent of Canada’s overall GDP and Canada-U.S. trade amounts to $2.5 billion a day.
Moreover, millions of Canadian jobs depend on commercial access to the United States. And as the automotive sector amply demonstrates, the two economies are highly integrated. (It is often said that car parts move across the border seven times before the vehicle is finally assembled.)
Because of this economic dependence, though, a Trump border tax would inflict serious harm on the Canadian economy. And we should not kid ourselves this time around that an exemption or quick fix for Canada is somehow in the cards. It won’t be. So if President Trump does move to implement a border tax, the Liberal government will need to say firmly to our U.S. friends that restricting Canadian imports hurts U.S. subsidiaries operating in Canada, makes it more difficult for struggling Canadian companies to purchase U.S. products, and that we have only a small trade surplus with the U.S. We should also not be shy about reminding U.S. officials that Canada is the top trading partner for some 37 U.S. states — a number of which voted for Trump in November.
Diplomatically speaking, Canada will have to work in concert with other like-minded countries within multilateral fora to push back against the border measure. More important, Ottawa will have to utilize our embassy in Washington to lobby strenuously senior officials in the Trump White House, members of Congress (and particularly key committee chairs), state governors and friendly U.S. business interests (such as those in the auto parts sector).
Simply put, we will have to inform the Trump team that the scope of convergence between the two economies means that punishing Canada with a border tax is tantamount to cutting off your nose to spite your face. But we all need to realize that we’re now in a much different political universe than the one in the early 1970s. And I have to admit, it’s hard to know what strategy, if any, would work with such a blinkered and unpredictable Trump presidency.
Canada’s non-bank lenders are reeling from Ottawa’s latest moves to cool Canada’s housing market, with many forced to immediately hike their mortgage rates or scale back their businesses.
First National Financial, the country’s largest non-bank mortgage lender, sent a note to its mortgage-broker clients last week announcing that it had temporarily suspended mortgages for rental properties. It did the same for “stated-income” loans to borrowers who can’t verify their employment using traditional means, such as selfemployed and contract workers. The company’s shares fell nearly 20 per cent last week.
Other lenders reacted similarly in response to changes in mortgage-lending rules that federal Finance Minister Bill Morneau announced last week in order to limit Ottawa’s exposure to risks in the housing market, particularly in the overheated Vancouver and Toronto areas. Those changes include tightening rules around qualifying rates for borrowers with down payments of less than 20 per cent and closing loopholes that have allowed some foreign investors to avoid paying capital-gains taxes when they sell property.
Non-bank lenders now control about a third of the market for new mortgages in Canada, roughly $100-billion to $140-billion per year.
Most compete directly for the same clients that are attractive to banks – borrowers with good credit scores and stable incomes – but have been able to offer lower rates or more flexible terms than the major banks.
“This has essentially crippled the non-banks,” said Ron Butler of Butler Mortgage, an online brokerage. “It’s like you took one of their legs and broke it in a compound fracture.”
Mr. Butler predicted many nonbank lenders would see their market share shrink significantly over the next year, with some doing 50 to 60 per cent fewer mortgages in the wake of the new rules. “It really is a massive, massive change,” he said.
Another lender, Merix Financial, told brokers it would no longer offer mortgages on rental properties and refinancing after Nov. 15. Homeowners refinance their mortgage by breaking their existing contracts early and taking a new mortgage, either to take advantage of a lower interest rate or take equity out of their home to pay other expenses.
MCAP Financial told brokers it will increase interest rates for new mortgage applications by 10 basis points. (A basis point is 1/100th of a percentage point.)
Starting in December, MCAP said it will also limit amortization periods on new refinancing applications to 25 years and increase interest rates on those loans by 15 basis points.
RMG Mortgages, which is owned by MCAP, said it was ending 35-year mortgage amortizations starting next month and would hike rates on “stated-income” mortgages by 15 basis points.
It is Ottawa’s new rules for portfolio insurance that have dealt the biggest blow to the country’s “monoline” lenders, financial institutions that have only one line of business – mortgages – and operate predominantly through networks of independent mortgage brokers, rather than through bricks and mortar retail branches.
Borrowers with down payments of less than 20 per cent are required to take mortgage insurance. But lenders will often separately take out portfolio insurance on pools of their uninsured mortgages, those with down payments of 20 per cent or more, so that they can sell the loans to investors through CMHC’s mortgage-backed securities programs.
Until now, portfolio insurance has given non-bank lenders access to a cheap source of financing, allowing them to offer mortgages at interest rates that are competitive with the major banks, which have other ways to fund their mortgage businesses, such as deposits.
Under the new portfolio insurance rules that kick in Nov. 30, lenders will no longer be able to insure mortgages with amortization periods beyond 25 years, those on homes worth more than $1-million, rental properties, or mortgage refinancing.
That is forcing lenders who have relied heavily on government-backed portfolio insurance to scramble to find other ways to finance these portions of their mortgage business or scrap them entirely.
Several industry players say the new rules will make it far more difficult for alternative lenders to compete with the major banks, who rely less on portfolio insurance to fund their mortgage business and who will likely be able to absorb the increased costs of stricter mortgage-insurance regulations without hiking rates on their mortgage products.
“Tightening of mortgage regulations generally, people are generally on board with that,” said James Laird, president of mortgage brokerage CanWise Financial. “What we’re not on board with is systematic changes that benefit the banks at the cost of the mortgage brokers backed by monoline lenders.”
If Ottawa goes ahead with plans to force lenders to share in the cost of defaulted mortgages that are covered by its governmentbacked mortgage insurance, that may push some smaller lenders to shut down entirely, while others may have to scale back their operations and lay off staff, Mr. Butler said.
“The banks are the only companies in Canada who could immediately absorb risk-sharing and not have to raise their rates immediately,” he said. “They could sit back and watch their competitors just dry up and blow away.”
THE PHILIPPINE CHAMBER of Commerce and Industries (PCCI) is teaming up with the Institute of Plant Breeding (IPB) on a technical assistance (TA) program that may include the breeding of okra, for which there is a projected market worth US$ 100 million in Japan. The planned breeding of high value crops— particularly okra and soybean vegetables for the popular side dish “edamame” for the Japan market—may be the top priority of the IPB-PCCI partnership, according to PCCI Agriculture Committee Chief Roberto C. Amores.
An initial discussion on the TA program was conducted last June 2 at the IPB-University of the Philippines Los Banos.
“For me the breeding of okra and soybean for the Japan market should be a priority for this partnership with IPB,” said Amores. “Genetic improvement in our fresh vegetables for Japan will be the key to increasing productivity of farmers.”
PCCI and Filipino agribusiness exporting firm Hi Las Marketing Corp., which Amores heads, may look for funding for the research.
IPB’s research on the disease resistant Bt eggplant was financed through a United States Agency for International Development (USAID) grant and a counterpart fund from the University of the Philippines Los Baños (UPLB) and the Department of Agriculture (DA).
The PCCI-IPB program will also involve a comprehensive collaboration aimed at providing easier, faster access for small farmers to financing; marketing of farmers’ produce direct to markets including hotels and restaurants; and development of contract growing business models.
“PCCI knows how important agriculture is. We want to have a national consultation for agriculture. We’re pushing for government’s financing of agriculture especially for the small ones,” said PCCI president George T. Barcelon. “For infrastructure, there should be irrigation, power facilities, and roads. There should be information on prices of agricultural supplies like fertilizers.”
IPB co-founder Dr. Emil Q. Javier said IPB’s collaboration with PCCI must zero in on enabling farmers to be part of the value chain. This way, Filipino farmers do not just become suppliers of cheap raw materials to big manufacturers or retailers, they also become partners for agri-businesses.
Glenn N. Baticados, UPLB Technology Transfer director, said IPB-UPLB may also partner with the private sector through the commercialization of its technologies.
“Jollibee is interested in getting 11 technologies that we developed,” said Baticados.
PAWTUCKET – With the legal battle having come to an end, the historic Silver Top Diner will hit the auction block next month, as members of the Pawtucket Redevelopment Agency and consultants for the city hope to bring it back to its previous glory, possibly in Pawtucket.
The auction will take place at 10 a. m. on Wednesday, Oct. 5 at the site of the diner, which currently sits on a vacant plot of land on Middle Street in Pawtucket.
“The next step in the diner saga is about to take place,” Mike Cassidy, a planning consultant for the city and the city’s former Planning Director, said. “It’s nice after starting this project, to see it looking like it’s coming to some resolution, getting it back somewhere and maybe even up and operating.”
Cassidy said his long-term goal is to see the diner returned to its former lore – as a fully-functioning diner in which to serve hungry patrons. He said he would “hate to lose that valuable piece of Americana.”
Susan Mara, the city’s acting director of Planning and Redevelopment and the acting executive director of the Pawtucket Redevelopment Agency, said that the Silver Top hitting the auction block is “a good thing all around.”
“I think it’s a great opportunity for the diner itself to be reused, it’s really a neat piece,” Mara said. “It’s an opportunity to be reused. I think it’s a good opportunity, it frees up lots for potential redevelopment on those sites, it’s a good opportunity overall.”
Mara agreed that the ideal situation would be that the diner is sold to someone who intends to keep it in Pawtucket.
“It would be great if it was purchased with the idea to reuse in Pawtucket. We’d absolutely be willing to work with them,” Mara said. “In general, the diners were real popular, but there are not that many left of them. We’re lucky we have the Modern Diner in Pawtucket, it’s an awesome example of how it can be preserved and reused.”
However, Mara said that the city will be willing to work with whoever purchases it, as the city is now participating as a supporter in the aftermath of the legal battle over the diner’s future.
In November 2015, a Superior Court jury rejected diner owner Patricia Tomasso-Brown’s claims that the PRA was negligent because it failed to properly manage the funds loaned to her by the agency to resurrect the idle restaurant as a going business. She was seeking monetary damages from the PRA, but the jury ruled in favor of the defendants and she received no award.
The legal feud involved a $100,000 loan the PRA made to Tomasso-Brown some 14 years ago after she bought the landmark dining car and moved it to Pawtucket from its original location in Providence. From the mid-1930s, the classic dining car was located on a parcel off Promenade Street near the Providence Place Mall, but it was forced to relocate in 2001 after the land beneath it was sold to develop apartments.
Despite its current condition, wrapped in a tarp for years, the Silver Top has a storied past. Manufactured by the New Jersey- based Kullman Dining Car Company, the historic dining car operated in Providence for 60 years and was a mainstay for hungry workers from the factories perched alongside the Moshassuck River and, closer to the end of its life in the capital city, as a popular after-hours eatery for revelers leaving the city’s bars and nightclubs.
New Delhi: The higher judiciary is not in favour of any mechanism that puts outside interference in the procedure of appointment of judges by the Supreme Court collegium. At last week’s interaction between the Chief Justice of India and two senior Cabinet ministers, the former is believed to have rejected the proposal to put in place a committee of retired judges to evaluate the applications of candidates for appointment as judges to the SC and high courts.
On Wednesday, foreign minister Sushma Swaraj and law minister Sadananda Gowda had met CJI T S Thakur at the latter’s residence to convince him on the draft memorandum of procedure (MoP) finalised by the Centre, over which the SC collegium, headed by the CJI, had expressed reservations over all key suggestions.
Swaraj, who headed the group of ministers which drafted the MoP, convinced the CJI on other issues that included setting up of secretariats at the SC and HCs to monitor and coordinate all appointment related work.
The MoP is a document which guides the appointment of judges to the SC and the 24 high courts. At present, there are two MoPs — one for the apex court and the other for high courts. The government had sent the draft MoP to the SC collegium in March. The CJI had returned the document in May raising objections to various clauses. Wednesday’s meeting was aimed at narrowing the differences between the executive and the judiciary. At the meeting, Justice Thakur said the committee of retired judges to evaluate applications was unacceptable, a source said.
The government wants the proposed panel to evaluate the experience of aspirants in detail before making recommendations to the collegium for a final call. One committee was proposed at the SC level and 24 others for each high court.
TWO major recipients of British aid are ‘fantastically corrupt’, David Cameron admitted yesterday. The Prime Minister was caught on camera making the candid remark to the Queen at a Buckingham Palace event marking her 90th birthday. He told her a summit in London tomorrow would see ‘the leaders of some fantastically corrupt countries coming to Britain’. Singling out Nigeria and Afghanistan for criticism, he told the monarch they were ‘possibly the two most corrupt countries in the world’.
Downing Street stood by the comments – which appeared to leave the Queen visibly shocked – saying the leaders of both countries acknowledged that they had a problem.
But Tory MP Philip Davies called for Nigeria and Afghanistan to be stripped of aid until they clean up their acts.
‘It is completely unjustifiable for the Prime Minister to pour taxpayers’ money into Nigeria and Afghanistan even though he knows they are fantastically corrupt, it is an absolute scandal,’ he said.
The two countries pocketed £435million of British cash last year – despite deep cuts to public services here. Their payments have soared 35 per cent since Mr Cameron took office in 2010.
Peter Bone, another Conservative MP,
said the PM’s pledge to spend 0.7 per cent of Britain’s income on aid meant more cash would inevitably be lost to corruption.
He added: ‘We have got tied to this ridiculous target which means we are more interested in spending money than in where it ends up. It is perverse.
‘Why else are we giving millions of pounds to countries that we know are fantastically corrupt? We just end up lining the pockets of corrupt leaders, bent officials, criminal gangs and, in the worst cases, terrorists.’
Steve Hilton, Mr Cameron’s former Downing Street guru, also criticised his intervention, highlighting a survey by the Economist suggesting the UK has a bigger problem with corruption than countries such as Brazil, France and the United States.
In a message on Twitter, Mr Hilton said: ‘Before anyone gets too complacent, the UK is fantastically corrupt too.’
Mr Cameron’s slip came during an apparent effort to make small talk about preparations for tomorrow’s anti-corruption summit.
He said: ‘We’ve got the Nigerians, actually we’ve got some leaders of some fantastically corrupt countries coming to Britain. Nigeria and Afghanistan, possibly the two most corrupt countries in the world.’
The Archbishop of Canterbury, who used to work in Nigeria, appeared to correct the Prime Minister, telling him: ‘But this particular president [Muhammadu Buhari] is actually not corrupt.’
The Queen then asked the archbishop: ‘He’s trying?’ He responded: ‘Oh yes, he’s trying very hard.’
Commons speaker John Bercow, who was also present, then attempted a joke, saying: ‘They are coming at their own expense one assumes?’ Mr Cam- eron replied: ‘Yes, because it’s an anticorruption summit everything has to be open, you see. So there are no closed door sessions. It’s all in front of the press. It could be quite, um, interesting. But there you go.’
Garba Shehu, a spokesman for the Nigerian president, said: ‘It is disturbing that despite all the efforts made by President Buhari in fighting corruption in Nigeria, his efforts have gone unnoticed. It is possible the Prime Minister was caught unawares and was referring to how things were done in the past.’
The Afghan embassy maintained a diplomatic silence last night.
But Lib Dem leader Tim Farron said: ‘Muhammadu Buhari won elections last year promising to fight widespread corruption.
‘So to see our Prime Minister talk about him like this is disgraceful. The reason this summit is being held is to help bolster newly elected leaders like Buhari and not to cut them down. The Prime Minister has gaffed, yet again.’
Mr Cameron also drew a rebuke from anti-corruption campaigners, who said he should look closer to home and deal with tax avoidance in British overseas territories, which are blamed for hiding dirty money. The secretive nature of the tax regimes in some dependencies, such as the British Virgin Islands, was highlighted in the recent Panama Papers scandal.
Mr Cameron is no stranger to the danger of unguarded comments in the presence of TV microphones.
In 2014, the Prime Minister was forced to issue a public apology to the Queen after he inadvertently revealed that she had ‘purred’ with pleasure when he told her Scotland had rejected independence. And last year he was recorded talking about Yorkshire people ‘hating each other’.
Comment – Page 14 GLOBAL rankings show Nigeria and Afghanistan really are among the world’s most corrupt countries – yet we give them millions of pounds in aid which could actually fuel corruption.
Transparency International, an international non-governmental organisation, ranks wartorn Afghanistan as the third worst country in the world for corruption, only better than North Korea and Somalia, while Nigeria is 32nd from bottom.
Despite this, Britain gives £237million a year in aid to Nigeria and £198million to Afghanistan, the latest figures show. The total aid spending on the two countries is 35 per cent higher than when David Cameron came to power in 2010.
Two years ago, a report from an aid watchdog found that UK aid fuels corruption in Nigeria, with one scheme increasing the likelihood that locals would have to pay backhanders to the police. The Independent Commission For Aid Impact said the Department for International Development (DfID) was not ‘up to the challenge’ of tackling corruption, often because it was concerned about offending local politicians.
÷ Transparency International’s corruption perception index puts Nigeria at 136 out of 168 countries. ÷ Corruption is endemic in Nigeria, with estimates as high as 400billion US dollars lost since it won independence from Britain in 1960. ÷ A 2014 study by the Independent Commission For Aid Impact found: ‘Petty corruption touches virtually every aspect of life and is accepted throughout society as normal and necessary. We heard stories of parents paying bribes to teachers to educate their children, workers paying bribes to get jobs and receive their salaries, and pensioners paying bribes to receive pensions.’ ÷ It is believed that up to 20billion US dollars have gone missing from
the books of the state oil company, the Nigerian National Petroleum Corporation. ÷ Millions of dollars meant to be spent on vaccinations and on the fight against ebola have been illegally diverted. ÷ Surveys show that the Nigerian police is seen as the most corrupt institution in the country, with people having to pay bribes before officers will agree to help them.
BUT HERE ARE THEIR AID GRANTS
÷ The UK gave £237million in aid to Nigeria in 2014. More than £1billion has been given to the country since 2010 – despite the fact that it is rich enough to afford a space programme. ÷ The DfID says the money goes towards providing clean water, food, health and education to millions of vulnerable people and does not go to government officials. It also claims there are robust checks to ensure the money is safe from corruption. ÷ A study into a multi-millionpound aid programme to boost schools found that it had produced ‘no major improvement in pupil learning’. Researchers found teachers at subsidised schools frequently failed to turn up and children were left to play football all day. ÷ The Independent Commission For Aid Impact found that after the UK spent millions on a scheme to tackle police bribery in Nigeria, locals said they were even more likely to have to pay backhanders.
÷ Transparency International’s corruption index puts Afghanistan at 166 out of 168 countries. ÷ The New York Times once wrote: ‘ Corruption can no longer be described as a cancer on the system: it is the system.’ ÷ Corruption takes the form of bribes, nepotism, position buying and illegal land transfers. ÷ Policemen are accused of turning a blind eye to or even colluding with criminals and insurgents in smuggling or kidnapping for ransom. ÷ A United Nations survey in 2012 found 50 per cent of Afghans were forced to pay bribes for government services. Money was demanded by teachers, customs officials, judges and prosecutors. ÷ Corruption in Afghanistan goes right the way to the top – with former president Hamid Karzai himself apparently implicated. The Kabul Bank corruption scandal in 2010 saw members of his family and others accused of spending the bank’s money to fuel their lavish lifestyles.
AND HERE’S THEIR AID
÷ In 2014, the UK gave £198million in aid to the country despite its record. The DfID says none of the money goes to the government and is only handed to local charities, with robust checks in place. ÷ Millions have been spent on trying to crack down on the opium and heroin trade, but despite all the efforts the country’s poppy harvest is now at its highest ever level. ÷ Last month it was reported that two schools in Helmand province, which were refurbished using British aid money, are now being used as bases for the Afghan army. ÷ Billions of dollars of aid have been siphoned off by political elites linked to Mr Karzai. Experts believe that much may also have ended up in the hands of the Taliban. ÷ The DfID said our funding supports basic services such as healthcare and education, economic development, and anti-corruption measures.
London, April 10: British Prime Minister David Cameron took the unusual steponSundayof publishing his tax records to try to end days of questions about his personal wealth caused by the mention of his late father’s offshore fund in the Panama Papers.
Cameron’s initial reluctance to admit that he had benefited from the fund caused a furore, compounding his problems at a tough timeforhisConservativegovernment. His party is badly split ahead of a June 23 referendum over whether Britain should stay in the European Union, and the government has been forced to backtrack on welfare cuts and is facing accusations of failing to protect the steel industry.
After saying on Saturday that he could have handled the fallout from the Panama disclosures better, Cameron released normally confidential details of his tax records for the past six years.
But any hope that this would draw a line under the issue was short-lived, as the mainSundaynewspaperszeroed in on a gift of £200,000 Cameron received from his mother in 2011, suggesting it may be a way of avoiding inheritance tax. A source at Downing Street said the suggestion was inaccurate, the gift had been declared and this was about a mother makingagifttohersoninthesame legal way that hundreds of thousands of Britons do every year.
Opposition Labour Party leader Jeremy Corbyn has accused Cameron of misleading the public by issuing what he described as four “weasel-worded” statements in as many days before finally admitting that he had benefited from his father’s fund.
After the tax records were disclosed, Corbyn told the BBC the prime minister still had questions to answer about what profits he had made from the offshore investment prior to 2010, when he sold a share worth about 30,000 pounds.
Cameron is not accused of having done anything illegal, and the fact that he is a wealthy man who enjoyed a very privileged upbringing is nothing new.
But the past week has been damaging because the drip-drip of carefully worded statements before the fuller disclosure created the impression he may have had something to hide.
In addition, Cameron stands accused of hypocrisy after portraying his government as being in the forefront of global efforts to crack down on offshore tax havens. A comment he made in 2012 about a famous comedian’s legal tax avoidance scheme being “morally wrong” has beenwidelyquotedbymedia.
Scores of politicians and business figures have been implicatedinthePanamaPapers, including the prime minister of Iceland who has since stepped down. The 11.5 million documents leaked from the Panamanian law firm Mossack Fonseca detail the creation of more than 200,000 companies in offshore tax havens.
Cameron said on Thursday his father’s investment trust was not set up to avoid tax but to invest in dollar-denominatedshares.Hesaidhe had paid all taxes due on his own investment.
The documents disclosed by Downing Street on Sunday, from RNS Chartered Accountants, show Cameron paid tax of £75,898 on income of £200,307 in the 2014-2015 financial year, the most recent one included.
Seeking to further regain the initiative, Cameron also announced on Sunday a new taskforce, jointly led by Britain’s tax authority and National Crime Agency, to buildontheworkBritainhas done to tackle money laundering and tax evasion.
But Labour’s finance policy chief, John McDonnell, said this was inadequate and rather than a taskforce there shouldbeafullpublicinquiry. He also said Cameron’s government had cut resources at the tax authority as part of its fiscalausteritydrive,andthat hadleftthebodyunequaltoits task. Reuters