North American leaders aim to give new impetus to strengthening economic ties at a meeting this week, even as a major dispute grinds on over Mexico’s energy policies which has distracted from cooperation on other issues like immigration.
Mexican President Andres Manuel Lopez Obrador will host his U.S. counterpart Joe Biden and Canada’s Prime Minister Justin Trudeau for talks in Mexico City from Monday through Wednesday, the first summit between the three since late 2021.
“A meeting like this is so that we keep moving forward on economic integration,” Lopez Obrador said this week.
Still, Mexico remains mired in an energy dispute with the United States and Canada, who argue their firms have been disadvantaged by Lopez Obrador’s campaign to give control of the market to his cash-strapped state energy companies.
A combative leftist, Lopez Obrador says his policy is a matter of national sovereignty, on the grounds that past governments skewed the energy market to favor private interests.
Washington and Ottawa believe his actions breach the United States-Mexico-Canada (USMCA) trade deal, and have launched dispute resolution proceedings against Mexico, souring the mood for cooperation over jobs and investment.
Trudeau told Reuters on Friday he would make the case that resolving the energy dispute would help bring more foreign investment to Mexico, and was confident of making progress.
Others argue the time for negotiation is over.
Aindriu Colgan, director of tax and trade policy at the American Petroleum Institute – whose members include ExxonMobil and Chevron – said it was time to call a dispute panel because “Mexico is blatantly violating the USMCA.”
Ahead of the summit, officials have publicly stressed North America’s shared economic interests, while privately tempering prospects for a major breakthrough on the energy spat.
“They will do their utmost to make it appear a happy gathering,” said Andres Rozental, a former Mexican deputy foreign minister. “As long as Lopez Obrador keeps migrants out of the border area, Biden will be happy.”
Since the COVID-19 pandemic scrambled supply chains, policymakers have stepped up calls for firms to relocate business from Asia to make the region’s economy more resilient.
As part of that drive, Lopez Obrador, who in June snubbed Biden’s invitation to the Summit of the Americas in Los Angeles in protest at his exclusion of the leaders of Cuba, Venezuela and Nicaragua, wants to discuss his plan to boost solar power in northern Mexico and secure U.S. financial support for it.
Biden’s aides say they expect a positive tone at the gathering after the announcement of a new migration plan this week, and Mexico caught a prominent cartel boss.
Ovidio Guzman, son of jailed kingpin Joaquin “El Chapo” Guzman, is a leader of the Sinaloa Cartel, a gang blamed for helping to fuel a surge in fatal overdoses of synthetic opioid fentanyl in the United States.
The U.S. government said stopping fentanyl flows would be an important part of talks on combating drug cartels. Supply chains, climate change and immigration would also be discussed.
A U.S. official, speaking on condition of anonymity, said any tensions over Lopez Obrador’s June snub had dissipated and the two presidents were in a better position to work together.
Mexico’s government has repeatedly urged the United States to commit funds to Central America and southern Mexico to boost development and stem the northward trek of migrants from what has long been one of the poorest regions on the continent.
It has also urged Washington to make it easier for migrants to get U.S. jobs. A Mexican official said the deal unveiled on Thursday broadening border expulsions would do that due to a quid pro quo it contained on facilitating migrant entry by air.
Mexico has recently also raised U.S. hackles with a plan to prohibit imports of genetically modified corn. Although Lopez Obrador’s government agreed to delay the ban until 2025, the issue would be discussed, he said. (Reporting by Dave Graham, Jarret Renshaw, Matt Spetalnick and Steve Scherer; Editing by David Holmes)
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
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