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Chinese dairy investor pressed Canada to ‘mitigate the risk’ of new NAFTA

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Less than three weeks after talks concluded on the revised North American free trade agreement, executives from a Chinese infant formula manufacturer that had invested $332 million to build a new plant in Kingston, Ont. asked for a sudden meeting with Canadian officials.

Zhiwen Yang, the general manager of Canada Royal Milk — the Canadian subsidiary of China Feihe Limited — wrote to then-Agriculture Minister Lawrence MacAulay and the Liberal MP for Kingston and the Islands, Mark Gerretsen, describing how Canada’s concessions in the Canada-United States-Mexico Agreement (CUSMA) put his business plans in jeopardy by limiting how much cow’s milk formula it can export and dismantling the dairy ingredient pricing system.

Yang asked the federal government to “mitigate the risks to the project.” His three-page letters, dated Oct. 16, 2018, were released to CBC News under the Access to Information Act.

A few days later, Feihe International Inc. “respectfully” asked the president of the Canadian Food Inspection Agency and another senior government official to meet for 90 minutes on Oct. 29 with Yang and his boss, Feihe International chair Youbin Leng, who was travelling to Canada with his directors of research and regulatory affairs.

“The purpose of the meeting is to discuss the regulatory framework in China and explore how we can work together. The expectation is not for a decision to be made, but to begin a conversation,” said the email from Carey Bidtnes, Canada Royal Milk’s human resources manager, who was part of the team that worked on bringing this investment to Canada during her previous employment with the Kingston Economic Development Corporation.

Bidtnes said that Canada Royal Milk was working with Health Canada and the CFIA to “resolve a challenge” with exporting its formula.

The documents reveal that the financial stakes for Feihe were higher by the fall of 2018 than they were in 2017, when CBC News reported on the potential international trade issues triggered by Feihe’s plans to export the vast majority of the infant formula it manufactures in Canada back to Chinese consumers.

As construction began, the Chinese investment was pegged at $225 million. A year later, the investment was estimated at $332 million and project proponents were predicting it would bring 277 direct full-time jobs to the region once production ramps up. A further 300 construction jobs have been created in the Kingston area and the plant is expected to generate the equivalent of over 1,000 more jobs in its eventual supply chain.

Chinese companies have a deeper relationship with China’s central government than private sector firms in North America do with their own national governments. Feihe is listed on the Hong Kong stock exchange, but its subsidiary, Canada Royal Milk, is incorporated in Canada.

The investment — the largest foreign direct investment in Ontario agriculture in the last decade — was finalized with officials from the Canadian Dairy Commission during a 2016 visit to Canada by Chinese Premier Li Keqiang.

CUSMA limits exports, changed pricing

American officials were monitoring this Chinese investment. President Donald Trump — and the powerful U.S. farm lobby — regard Canada’s supply management system as “unfair” because it blocks most American dairy from Canada’s domestic market.

In the CUSMA, Canada agreed to several concessions that harm its dairy industry — including strict limits, enforced by new export charges, on international exports of infant formula and skim milk.

CUSMA’s export limit for cow’s milk formula is lower than what Feihe originally planned to produce in Kingston, according to a presentation obtained three years ago by CBC News.

Newly released government talking points say Canadian negotiators “were in contact with a number of individuals with direct knowledge of the proposed facility’s operations,” including the Kingston Economic Development Corporation, “to ensure negotiators had a thorough understanding of the intended operation … with a view to avoiding unintended impacts.”

 

Kingston’s mayor, Bryan Paterson, and a team of other local officials visited China to help land the infant formula facility in Eastern Ontario. It’s the largest foreign investment in Ontario’s agriculture industry in a decade. (Office of Mayor Bryan Paterson)

 

It’s the same response CBC News got in 2018 when it asked whether Canada’s NAFTA renegotiation team spoke directly to Feihe about its plans before signing off.

Another concession Canada agreed to in the CUSMA talks dismantled part of its dairy pricing regime, ending lower ingredient pricing that kept processors competitive. Canada’s prices are now based on American rates.

When Feihe agreed to invest in Ontario, Canada’s lower ingredient price was part of its forecasts.

Xinhua, the Chinese news agency, reported that then-foreign affairs minister Chrystia Freeland spoke to Chinese Foreign Minister Wang Yi to brief him within days of concluding CUSMA negotiations.

But if the two ministers discussed the dairy concessions, they apparently didn’t resolve the manufacturer’s concerns because the documents show that, within days of that conversation, Feihe began its own outreach to the Canadian government.

Chinese asked Canada to limit competition

Earlier presentations of Canada Royal Milk’s business plans didn’t mention producing and exporting skim milk powder for the adult market. But this letter to MacAulay said the company would produce skim powder for export during a “ramp up” period of testing the new facility.

Canada already has a significant surplus of skim milk powder, left over after meeting Canada’s strong demand for butter. Making baby formula at this new plant was supposed to help use up this surplus, not exacerbate it.

 

Feihe eventually plans to manufacture formula from both cow and goat milk at its Kingston facility, exporting most of it to China. A decade after its tainted milk scandal, some Chinese consumers still have more confidence in foreign formula. (Andy Wong/Associated Press)

 

The global market for skim is crowded and ultra-competitive, with American farmers hostile to any threats. Under the World Trade Organization’s Nairobi Agreement, Canada agreed to stop exporting skim milk products as of January 2021.

“The export cap is a very serious issue for the operations of the company for 2019 and 2020,” the letter from general manager Yang to then-minister MacAulay said, “and we believe it will hinder the growth of the entire industry in the future.”

In its correspondence, Feihe asked for assurances that its facility had the support of all levels of government. It also requested “reasonable quota” so it could take maximum advantage of the tariff-free exports that would be allowed under the CUSMA, including a “guarantee that the full annual export quota for infant formula would be assigned to Canada Royal Milk.”

Our team has already been contacted by U.S. dairy producers who are eager to sell their products to us.– Zhiwen Yang, General Manager, Canada Royal Milk

Canada is allocating its export quota for skim milk powder based on processors’ past production. But for infant formula, export quota was distributed according to planned production — presumably to accommodate the new plant coming online.

“Currently, details on which entities have received an allocation for the dairy export thresholds are not public,” Jean-Sébastien Comeau, a spokesperson for Agriculture Minister Marie-Claude Bibeau, told CBC News.

In a question redacted from one document released to CBC News but repeated without redaction in another, Yang also asked the government if it would “take steps to limit the licensing of new infant formula manufacturing in Canada.”

While that appears to be anti-competitive behaviour, no other Canadian dairy processor has shown interest in making infant formula in recent years — which is why Canada pursued the Chinese investment in the first place.

Looking for compensation

On the demise of ingredient pricing, “it’s unclear how this will impact our operations in the medium to long term,” Yang’s letter to MacAulay said.

“Our team has already been contacted by U.S. dairy producers who are eager to sell their products to us,” the letter continues.

“What has the government proposed to assist dairy processors to overcome the loss of [ingredient] pricing?”

The letter sent to MP Gerretsen repeated the same demands.

 

Construction of the massive Canada Royal Milk facility in Kingston, Ont. was expected to create about 300 jobs. Once production begins, it expected to employ 277 people full-time jobs and create the equivalent of another 1,000 jobs in local supply chains. (Feihe International Inc.)

 

Although Bibeau announced funding for dairy producers harmed by trade deals with the European Union and Pacific Rim countries in the days leading up to the 2019 federal election, the industry is still waiting for the compensation it was promised when NAFTA was replaced.

It’s unclear whether Canada Royal Milk would be eligible for compensation but the Chinese investment has qualified for other federal and provincial support programs.

If Feihe believes its investment was harmed by Canada’s concessions, it could sue for damages under the 2012 Canada–China Foreign Investor Protection Agreement, which was negotiated by the previous Conservative government.

“The sued country can opt not to make public anything until an arbitration award,” Osgoode Hall law professor and investment treaty specialist Gus Van Harten said, noting this agreement is unique in this regard.

International Trade Minister Mary Ng’s spokesperson Ryan Nearing said “there has been no dispute launched against Canada under the Canada-China FIPA to date, nor notification of an intention to do so.”

Despite delays, manufacturer now ‘confident’

In an interview with CBC, MP Gerretsen said he passed on the requests he received from the company to officials at Agriculture and Agri-Food Canada. But he said the only formal encounter he’s had with Canada Royal Milk was a tour of the construction site in his riding earlier in 2018.

“A number of the issues that were in their letter I believe have been addressed,” he said.

In departmental email, one bureaucrat called Yang’s correspondence “an interesting letter indeed.”

Before federal government officials met with the Chinese, two senior officials from Prime Minister Justin Trudeau’s office, Brian Clow and Simon Beauchemin, joined an “urgent briefing” with MacAulay’s office — an “additional twist,” another bureaucrat called it.

“The Chairman is in Canada in the context of making more investment,” a senior official said. The request to meet with the president of the CFIA was “in the context of the application for export,” he said, “which may not be the full reality.”

Comeau, Bibeau’s spokesperson, tells CBC the Kingston facility now has its licence to export from the CFIA.

The Canadian Dairy Commission originally hoped an investor like Feihe could build a second facility, perhaps in Western Canada. But now, the government “is not in discussion with Canada Royal Milk about additional future investments,” Comeau said.

Earlier plans obtained by CBC News suggested Kingston facility would be exporting by now. Bidtnes told CBC News its production lines are complete and it is pleased with the results of its test batches.

“Timelines for beginning commercial production have been stretched into the fall due to the impact of COVID-19 on some regulatory processes,” she said, adding that the company remains “confident in our business plans and the support we have received from all levels of government.”

Source:- CBC.ca

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Ginella Massa to join CBC News Network as primetime host – CBC.ca

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Journalist Ginella Massa will join CBC News Network as the host of a new primetime show, the Crown corporation announced Wednesday as part of programming changes over the next few months.

“She’s just got a spark and curiosity to her that is refreshing at a time when there’s so much to be interested in, and so much that is sort of unchartered in terms of the kind of journalism we do, the kind of stories we tell,” said Michael Gruzuk, CBC’s senior director of programming. 

Massa will also join CBC’s flagship news program The National as a special correspondent, as well as take part in “many of our CBC News specials,” according to an internal CBC memo.

A graduate of Seneca College and York University, Massa is currently a reporter for CityNews in Toronto. In 2019, she was part of the CityNews team that won a Canadian Screen Award for best live special for coverage of an Ontario leaders’ debate.

She has also worked with CTV, NewsTalk 1010 and Rogers TV, moving from behind the scenes as a news writer and producer to in front of the camera as a television journalist. 

Massa, a Seneca College and York University graduate, will work as a special correspondent for The National alongside hosting on News Network. (David Misener/CityNews)

In 2015, she became the first hijab-wearing TV reporter in Canada, and then the next year, the first to anchor a major newscast in the country.

Massa said she hopes to use her new CBC role to focus on stories from different perspectives — be it race, religion or class. 

“For the last decade of my career in journalism, both behind the scenes and on air, I have often been the only one who looks like me in the room,” Massa said. 

“I do try to bring those perspectives to the newsroom … bring the stories that people around me are talking about, which aren’t always the stories that get the most attention.”

Beginning in the new year, Massa’s hour-long show will air weeknights at 8 p.m. ET on CBC News Network.

New programs

Her hiring comes alongside a number of other changes on the cable network. 

On Nov. 1, it will launch Rosemary Barton Live, a two-hour Sunday program focused on federal politics, followed by the premiere of CBC News Live with Vassy Kapelos, a weekday “fast-paced roundup of breaking political and Canadian stories” on Nov. 2, the internal memo said.

Kapelos will continue to host Power and Politics, which moves to a new time slot of 6 p.m.-8 p.m. ET on weekdays.  

CBC journalist Carole MacNeil will host a new weekday afternoon show on News Network, which will be “more programmed” rather than focusing on breaking news that just happened, Gruzuk said.  

The changes come weeks after Barbara Williams, CBC’s executive vice-president of English services, announced 130 job cuts across the country. That included 58 news, current affairs and local positions, with most of them in Toronto.

The company cited higher costs and lower revenues as the reason for the cuts, precipitated by a $21-million budget deficit. That shortfall was, in particular, “due to declines in advertising and subscription revenues linked to our traditional television business,” Williams wrote in a letter to staff.

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Canada's top doctor calls for 'structural change' to address COVID-19 inequities – CTV News

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OTTAWA —
Canada’s Chief Public Health Officer Dr. Theresa Tam is calling for “structural change” across health, social, and economic sectors in the wake of COVID-19, in a new report highlighting the successes and shortfalls in the country’s pandemic response to date.

“I do see COVID-19 as a catalyst for collaboration between health, social, and economic sectors, and I have observed at the federal level, but also from local levels, and provincial levels,” she told reporters during a press conference discussing the report.

Tam said that while there are examples of decisions taken that begin to address some of these shortcomings—such as increasing affordable housing availability and financial supports for low-income and precarious workers—these policies should be extended past the emergency phase of the pandemic.

“What I’m really, really keen to see is that this continues… The report is calling for this to be a more sustained approach,” she said. “Why can’t we have those governance structures beyond the crisis and into recovery?”

In the Public Health Agency’s annual report made public on Wednesday, Tam offers new insights and statistics related to Canada’s battle against the novel coronavirus over the last several months and the “serious threat” the virus continues to pose. 

For example, in Canada:

  • 80 per cent of COVID-19-related deaths have been residents of long-term care facilities;
  • 19 per cent of national cases are among health-care workers; and
  • 92 per cent of hospitalized COVID-19 patients had at least one underlying health condition.

The annual report is entitled “From Risk to Resilience: An Equity Approach to COVID-19,” and it gives an overview of COVID-19’s consequences so far, such as the disproportionate health impacts experienced by workers who provide essential services, racialized populations, people living with disabilities or mental illnesses, and women. 

It also includes recommendations on how to improve the country’s pandemic preparedness, response, and recovery. 

The report says the “structural change” should include improving employment conditions and conditions inside long-term care homes, increasing access to housing, as well as enhancing Canadians’ ability to access social and health services both in-person and online. 

Tam said she hopes that in future pandemic planning, “it can’t just be health and public health making it known that all other departments and different sectors, and different aspects of societies need to be part of the response. We need to sort of build it in explicitly so that, you know, future pandemics and health crises have those other supports come into play immediately.”

As Tam argues, Canadians’ health depends on their social and economic well-being and the severity of COVID-19 illness may be influenced by their access to these kinds of supports. 

“No one is protected until everyone is protected,” says Tam in the report. 

Tam’s overall recommendations are distilled into three calls:

  • Sustaining governance at all levels for “structural change” in health, social, and economic sectors. The report notes that the health of people in Canada was not equal before COVID-19, but that the pandemic has exposed and exacerbated existing shortcomings. Tam suggests that more data needs to be collected and used to inform policy decisions to eliminate inequities and mitigate some potential long-term pandemic impacts;
  • Harnessing “the power of social cohesion” to control and minimize the virus’ spread. She suggests this can be done by leaders sharing evidence and information to provide Canadians with confidence in taking public health precautions such as mask-wearing; and
  • Strengthening public health capacity. Tam says that more work is needed to ensure Canada’s public health system is able to handle case surges while having the capacity to deal with non-COVID-19 health issues, including re-evaluating “what sustained investments and the future of public health would look like.”

GLOBAL COMPARISONS 

The report also goes over the timeline from the first confirmed case in Canada and when community transmission began, to the various rolling restrictions and travel advisories imposed. 

From a global perspective, according to the report, Canada ranked 79th out of 210 countries with respect to total cases per million inhabitants, and 26th for total deaths per million, as of Aug. 22. The outbreaks in Canadian long-term care homes are cited as a driving factor in why Canada is so high on the list of countries when it comes to deaths. 

“Pandemic preparedness did not extend into these settings leaving residents vulnerable to the introduction, spread and impact of a novel virus,” the report states. 

In an interview on CTV’s Power Play, Tam was asked whether she thinks enough lessons from the first wave have been learned to prevent the same high rate of deaths in long-term care homes. She said that so far the scale of the outbreaks inside these homes is not as large, and efforts have been taken to improve infection control, but the virus is “very sneaky” and preventing more seniors’ deaths still depends on the actions all Canadians take.

“Right now the second resurgence, a lot of the cases are in the younger adult population, but what we’re seeing is that it’s beginning to permeate through other age groups including the elderly,” Tam said.  

Further, analysis of international travel-related cases between January and March found that 35 per cent of cases entered Canada from the United States, 10 per cent from the U.K. and France, and 1.4 per cent from China. Once travel restrictions were imposed, 91 per cent of reported cases by August originated in Canada.

COMMUNICATION STRUGGLES 

The report notes that in the absence of an effective treatment or vaccine, individual and collective public health measures need to be taken to control the pandemic. However, “accurate, timely and clear communication” has been a challenge. 

Tam notes that there have been “a number” of issues on this front, such as Canadians being exposed to a vast amount and varying quality of information and the confusion spawning from the frequently-moving goal posts when it comes to public health advice due to the evolving science. 

“Information needs to be tailored and locally contextualized, while at the same time balanced with consistent key messaging being shared across the country,” the report states. 

Tam is advising that as long as the virus is uncontrolled, public health officials and governments need to be transparent and provide regular updates on COVID-19 and up-to-date guidance. 

It’s a part of Tam’s mandate to provide Health Minister Patty Hajdu with a report on the state of public health in Canada annually, which then is tabled in Parliament.

The report is based on Canadian data available from January to the end of August, and notes that because the virus and evidence around it continues to rapidly evolve, “the report was written with the knowledge that the story of this pandemic is continuing to change every day.”

TIMELINE OF KEY MILESTONES

  • December 31, 2019: PHAC was notified of a pneumonia-like illness of unknown cause originating in Wuhan, China.
  • January 22, 2020: Canada implements novel coronavirus screening requirements for travellers returning from China. Residents are asked additional screening questions to determine if they have visited the city of Wuhan, China.
  • January 25, 2020: First presumptive confirmed case of 2019-nCoV related to travel to Wuhan, China confirmed in Ontario.
  • February 20, 2020: First COVID-19 case in Canada from travel outside mainland China, from Iran, reported in British Columbia.
  • February 23, 2020: First recorded COVID-19 case in Canada linked to community transmission.
  • February 24, 2020: Alberta records first COVID-19 case in Canada linked to travel to the U.S.
  • March 7, 2020: First COVID-19 outbreak at a long-term care home in Vancouver, British Columbia involving 79 cases.
  • March 11, 2020: Canada surpasses 100 reported COVID-19 cases.
  • March 12-22, 2020: Physical distancing measures are implemented across the country. All provinces and territories declare a state of emergency and/or public health emergency. Non-essential businesses close or have significantly reduced capacity; gatherings are restricted; schools close; advisory issued for those who can, to work from home.
  • March 13, 2020: The Government of Canada recommends avoiding non-essential travel outside of Canada,
  • March 16, 2020: Government of Canada advises all travellers entering Canada to self-isolate for 14 days.
  • March 18–19, 2020: Additional international travel advisories and border restrictions are implemented: Entry to Canada by air is prohibited to all foreign nationals (except those from the United States); Canada and the United States agree to temporarily restrict non-essential travel across the Canada-US border; International flights are redirected to only 4 airports.
  • March 28, 2020: First reported outbreak among temporary foreign workers in an agricultural setting, involving 23 people.
  • April 7, 2020: Council of Chief Medical Officers of Health issue a statement supportive of wearing non-medical masks as an additional layer of protection for other people in close proximity.
  • April 14, 2020: Largest known COVID-19 outbreak reported at homeless shelter in Toronto, Ontario, involving 164 cases.
  • April 15, 2020: Lockdown in response to largest known outbreak at a correctional facility in Laval, Quebec involving 162 cases.
  • April 17, 2020: First reported COVID-19 outbreak in an isolated northern community in Saskatchewan, affecting 117 residents.
  • April 24, 2020: New Brunswick is the first province to ease physical distancing restrictions.
  • May 6, 2020: Alberta reports a COVID-19 outbreak at a meat processing plant, which becomes the largest outbreak at a single location in Canada (by the end of August) with 1,560 people confirmed.
  • June 17, 2020: First COVID-19 outbreak in a religious-cultural community declared in Saskatchewan, involving 285 people.   

Timeline source: Public Health Agency of Canada. 

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Bank of Canada plans to keep interest rate near zero until 2023 – CBC.ca

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The Bank of Canada says it has no plans to change its benchmark interest rate until inflation gets back to two per cent and stays there, something it says isn’t likely to happen until 2023.

The central bank said Wednesday it has decided to keep its benchmark interest rate steady at 0.25 per cent. The news was expected by economists, as although the economy is showing signs of recovering from the impact of COVID-19, things are still a long way from normal, so cheap lending will be needed for a long while yet.

The bank outlined a fairly bleak assessment of the worst case scenario when it laid out its last Monetary Report in July. But the roughly eight months since COVID-19 began in Canada have given the bank a clearer picture of how things are shaking out, even if the picture isn’t always rosy.

“With more than six months since the onset of the pandemic, the Bank has gained a better understanding of how containment measures and support programs affect the Canadian and global economies,” the bank said.

“This, along with more information on medical developments related to COVID-19, allows the bank to now make a reasonable set of assumptions to underpin a base-case forecast.”

Rocked by COVID-19, the central bank says it expects Canada’s economy will shrink by 5.7 per cent this year, but grow by 4.2 per cent next year, and 3.7 per cent in 2022. Inflation, meanwhile, is expected to be 0.6 per cent this year,
1.0 per cent next year, and 1.7 per cent in 2022.

Bank of Canada Senior Deputy Governor Carolyn Wilkins and Governor Tiff Macklem spoke to reporters in Ottawa today. 2:35

Those growth and inflation projections, however, are based on two leaps of faith: that there won’t be a second — or third — widespread lockdown in Canada, and that a vaccine or some sort of effective treatment will be widely available by the middle of 2022 at the latest.

“The breadth and intensity of re-imposed containment measures, including impacts on schools and the availability of child care, could lead to setbacks,” the bank said in the quarterly Monetary Policy Report that accompanied the rate decision.

Impact on mortgages

The bank’s outlook and rate decisions have real world impact on Canadian borrowers and savers. Fixed-rate mortgages are priced based on what’s happening in the bond market, but the central bank’s rate has a direct impact on variable rate mortgages.

So telegraphing that rates are going to stay low for long presents something of a conundrums for borrowers, says James Laird, Co-founder of Ratehub.ca and president of mortgage brokerage CanWise Financial.

“There is no wrong answer right now,” Laird said. 

“Canadians who derive value from certainty should choose a fixed rate. For Canadians who are open to a little more risk, considering a variable rate is certainly appropriate, since the Bank is committed to keeping rates where they are for at least another two years.”

Economist Sri Thanabalasingam with TD Bank says the bank made it clear on Wednesday that the road to a full recovery will be slow. 

“There’s a long way to go for the Canadian economy to emerge out of this crisis, ” Thanabalasingam said.

“The path forward is filled with uncertainty, most of which could set the recovery back a step or two, [so] the bank is set to continue to provide monetary support for many years to come.”

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