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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.

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“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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Alberta's population surges by record-setting 202,000 people: Here's where they all came from – CBC.ca

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Alberta smashed population-growth records in the past year, mainly due to people moving to the province from across Canada and around the world.

The province’s population surged to just over 4.8 million as of Jan. 1, according to new estimates released Wednesday by Statistics Canada.

That’s an increase of 202,324 residents compared with a year earlier, which marks — by far — the largest annual increase on record.

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Alberta also broke a national record in 2023 for interprovincial migration, with a net gain of 55,107 people.

“This was the largest gain in interprovincial migration nationally since comparable data became available in 1972,” Statistics Canada said in a release.


Most of the interprovincial migrants came from Ontario and British Columbia.

Statistics Canada estimates that 38,236 Ontarians moved to Alberta last year, versus 14,860 Albertans who moved to Ontario, for a net gain of 23,376 people.

Similarly, an estimated 37,650 British Columbians moved to Alberta, compared to 22,400 Albertans who moved to B.C., for a net gain of 15,250.


All told, interprovincial migration accounted for 27 per cent of Alberta’s population growth over the past year.

That put it just ahead of permanent immigration, which accounted for 26 per cent, and well ahead of natural population increase (more births than deaths), which accounted for eight per cent.

The largest component, however, was temporary international migration.

Non-permanent residents from other countries accounted for 39 per cent of the province’s population growth in the past year, reflecting a national trend.


Canada’s population reached 40,769,890 on Jan. 1, according to Statistics Canada estimates, which is up 3.2 per cent from a year ago.

“Most of Canada’s 3.2-per-cent population growth rate stemmed from temporary immigration in 2023,” Statistics Canada noted.

“Without temporary immigration, that is, relying solely on permanent immigration and natural increase (births minus deaths), Canada’s population growth would have been almost three times less (1.2 per cent).”

Alberta’s population, meanwhile, grew by 4.4 per cent year-over-year.

Alberta now represents 11.8 per cent of the country’s population, its largest proportion on record. 

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Why Canada's record population growth is helping – and hurting – the economy – CTV News

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Canada has recorded the fastest population growth in 66 years, increasing by 1.3 million people, or 3.2 per cent, in 2023, according to a new report from Statistics Canada.

The country has not seen such growth since 1957, when the spike was attributed to the baby boom and an influx of immigrants fleeing Hungary.

The vast majority of Canada’s growth last year was due to immigration, with temporary residents — which includes foreign workers and international students — making up the largest proportion of newcomers.

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“We need people coming to Canada to help with our economy,” says Matti Siemiatycki, a professor of planning at the University of Toronto. “There are many jobs and professions where there are vacancies, and that is having an impact, whether in the healthcare sector or trades and construction sector.”

Siemiatycki adds immigrants also bring “ingenuity… resources… and culture” to Canada.

Newcomers are relied on to help keep pace with Canada’s aging population and declining fertility rates, but the influx also presents a challenge for a country struggling to build the homes and infrastructure needed for immigrants.

“It’s an incredibly large shock for the economic system to absorb because of just the sheer number of people coming into the country in a short period of time,” says Robert Kavcic. a senior economist and director with BMO Capital Markets.

“The reality is population can grow extremely fast, but the supply side of the economy like housing and service infrastructure, think health care and schools, can only catch up at a really gradual pace,” Kavcic says. “So there is a mismatch right now.”

The impact of that mismatch can most acutely be seen in the cost of rent, services and housing.

In December, Kavcic wrote in a note that Canada needs to build 170,000 new housing units every three months to keep up with population growth, noting the industry is struggling to complete 220,000 units in a full year.

To address this, Ottawa has announced plans to cap the number of new temporary residents while also reducing the number of international student visas, a move economists say could offer some relief when it comes to housing and the cost of living.

“The arithmetic on the caps actual works relatively well because it would take us back down to 1 per cent population growth which we have been used to over the last decade and which is more or less absorbable by the economy,” Kavcic says. “The question is whether or not we see policy makers follow through and hit those numbers.”

Economists believe these changes could help ease inflationary pressures and may make a Bank of Canada rate cut more likely, but could also lead to slower GDP growth.

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Canada’s population hits 41M months after breaking 40M threshold – Global News

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Nine months after reaching a population of 40 million, Canada has cracked a new threshold.

As of Wednesday morning, it’s estimated 41 million people now call the country home, according to Statistics Canada’s live population tracker.

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The speed at which Canada’s population is growing was also reflected in new data released Wednesday by the federal agency: between Jan. 1 2023 and Jan. 1 2024, Canada added 1,271,872 inhabitants, a 3.2 per cent growth rate — the highest since 1957.

Most of Canada’s 3.2 per cent population growth rate stemmed from temporary immigration. Without it, Canada’s population growth would have been 1.2 per cent, Statistics Canada said.


Click to play video: 'Business News: Job growth fails to keep pace with population'

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Business News: Job growth fails to keep pace with population


From Oct. 1 to Dec. 31, 2023, Canada’s population increased by 241,494 people (0.6 per cent), the highest rate of growth in a fourth quarter since 1956.

Usha George, a professor at the Toronto Metropolitan Centre for Immigration and Settlement at Toronto Metropolitan University, told Global News in June a booming population can benefit the economy.

“It is not the bodies we are bringing in; these are bodies that fill in the empty spaces in the labour market,” she said.

“They bring a very-high level of skills.”


Click to play video: 'Canadian millennials surpass baby boomers as dominant generation: StatCan'

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Canadian millennials surpass baby boomers as dominant generation: StatCan


However, Ottawa has recently sought to ease the flow of temporary immigration in a bid to ease cost-of-living woes.


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Immigration Minister Marc Miller said on March 21 Ottawa would set targets for temporary residents allowed into Canada to ensure “sustainable” growth in the number of temporary residents entering the nation.

The next day, BMO economist Robert Kavcic in a note to clients the new limits will have a positive impact on Canada’s rental market and overall housing crisis.

“We’ve been firm in our argument that Canada has had an excess demand problem in housing, and this is maybe the clearest example,” Kavcic said.

“Non-permanent resident inflows, on net, have swelled to about 800K in the latest year, with few checks and balances in place, putting tremendous stress on housing supply and infrastructure.”

Alberta gains, Ontario loses: A look at Canadian migration in 2023

If Alberta is truly calling, then it appears more Canadians are choosing to answer.

Putting the pun on the provincial government’s attraction campaign aside, Canada’s wild rose country saw the largest net gain in interprovincial migration in 2023, Statistics Canada said in Wednesday’s report.


Click to play video: 'Is Alberta ready for population growth?'

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Is Alberta ready for population growth?


The agency said 55,107 Canadians moved to Alberta last year, which was the largest gain in interprovincial migration nationally since comparable data become available in 1972.

“Alberta has been recording gains in population from interprovincial migration since 2022, a reverse of the trend seen from 2016 to 2021, when more people left the province than arrived from other parts of Canada,” Statistics Canada said.

“Approximately 333,000 Canadians moved from one province or territory to another in 2023, the second-highest number recorded since the 1990s and the third straight year that interprovincial migration topped 300,000.”

Meanwhile, British Columbia had 8,624 more residents move out than in in 2023, meaning net interprovincial migration was negative for the first time since 2012, Statistics Canada said.

In general, the largest migration flows for British Columbia and Alberta are with each other, and most of the net loss from British Columbia in 2023 was to Alberta, it added.


Click to play video: '‘Enormous pressure’ expected in Ontario home care due to high growth of senior population'

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‘Enormous pressure’ expected in Ontario home care due to high growth of senior population


It also seems that good things may no longer be growing in Ontario; Canada’s most populous province lost 36,197 people to other regions in 2023, the biggest regional loss in 2023, Statistics Canada said.

That followed a loss of 38,816 people in 2022; the only other times a province has lost more than 35,000 people due to migration to other parts of Canada occurred in Quebec in 1977 and 1978.

Alberta aside, net interprovincial migration was also up in Nova Scotia (+6,169 people), New Brunswick (+4,790) and Prince Edward Island (+818), although all three Maritime provinces gained fewer interprovincial migrants in 2023 than in the two previous years, Statistics Canada said.

— with files from Uday Rana and Sean Previl

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