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Red Sea crisis a risk for EU economy, trade chief warns

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Trade disruptions caused by instability in the Red Sea pose a risk for the EU’s economic outlook as well as the supply and price of energy, the bloc’s trade commissioner Valdis Dombrovskis warned on Tuesday.

“We see already that there are disruptions to the shipping routes concerning the Red Sea and, correspondingly, the use of the Suez Canal,” Dombrovskis said.

“Currently, we see that the effects of those disruptions are contained. Also their effects on, for example, oil and gas prices, are contained,” he added. “But certainly this is a risk for the European economy which we need to follow very closely.”

Dombrovskis’ warning came as a Greek-owned vessel carrying the Maltese flag became the latest target of a missile by Yemen Houthi rebels.

A recent raft of attacks by Iran-backed Houthi rebels on international commercial vessels in the Red Sea has forced many major shipping firms, some European, to avoid the area.

The Red Sea and the Suez Canal are one of the world’s most strategic maritime trade routes, where around 15% of global shipping traffic passes. The alternative detour around the Cape of Good Hope can add as much as a month of journey time, threatening to upend world trade with delays and added costs.

Four of the world’s five largest container shipping firms have either paused or diverted their Red Sea operations, including Danish-owned Maersk, whose vessel was attacked by Houthi rebels earlier this month.

The Houthis claim they are targeting Israeli-owned ships in response to the conflict in the Gaza Strip, but US and European vessels have also been sabotaged.

US- and UK-led retaliation in the form of airstrikes on Houthi targets in Yemen has so far failed to force the Houthis to withdraw, and fuelled fears of a further escalation of the conflict brewing in the Middle East.

Western nations, as well as Iran, have sent warships to patrol the area and protect vessels from sabotage. A US-led naval mission originally enlisted the support of 20 countries, but many have pulled out over fear of escalation.

The EU is also mulling its own bespoke operation to protect European vessels in the area.

Implications for Europe

The Houthis have vowed that the US and UK’s airstrikes “will not go unpunished”, sparking fears more European and international firms will choose to use the alternative Cape of Good Hope route for fear of retaliation.

Economists warn of a domino effect that could eventually hit European consumers.

“Europe and its people can expect to face higher energy costs, delayed shipments, and a return of inflation resulting in higher and longer-lasting interest rates,” economist Osama Rizvi wrote for Euronews.

Since Russia’s invasion of Ukraine in early 2022, the EU has upped its oil imports from the Middle East as part of attempts to wean itself off Russian energy products, resulting in an increased EU reliance on oil passing through the Red Sea and Suez Canal.

The EU’s economy commissioner Paolo Gentiloni warned Monday that the tensions could eventually lead to a spike in energy prices in Europe.

“What is happening in the Red Sea (…) is not for the moment apparently creating consequences on energy prices and inflation,” Gentiloni explained.

“But we think that it should be monitored very closely because these consequences could materialise in the coming weeks,” he added.

Supply chains hit

In a sign that industry is feeling the knock-on impact of the crisis, Tesla, Volvo and Suzuki have all announced they will suspend production at European factories due to supply chain issues resulting from the Red Sea attacks.

American multinational Tesla said last week it would pause most car production at its Berlin-based Gigafactory because of a shortage of components. Swedish multinational Volvo, which is majority Chinese-owned, has also suspended production at its plant based in Ghent, Belgium, because of delays in deliveries.

Suzuki Motor became the latest to announce a suspension in operations on Tuesday. It will pause production at its Hungarian plant for seven days.

According to the Wall Street Journal, British oil giant Shell also paused all Red Sea shipments on Tuesday due to escalating tensions in the area.

Qatar’s prime minister also sounded the alarm on Tuesday, warning shipments of liquified natural gas (LNG) will also be affected.

“LNG is… as any other merchant shipments. They will be affected by that,” Sheikh Mohammed bin Abdulrahman Al Thani said from the World Economic Forum in Davos.

Reuters reported that QatarEnergy, the world’s second-largest LNG exporter, had temporarily paused journeys through the Red Sea route on Monday. But shipping tracker data showed that some Qatari LNG vessels had resumed course on Tuesday.

 

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A timeline of events in the bread price-fixing scandal

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Almost seven years since news broke of an alleged conspiracy to fix the price of packaged bread across Canada, the saga isn’t over: the Competition Bureau continues to investigate the companies that may have been involved, and two class-action lawsuits continue to work their way through the courts.

Here’s a timeline of key events in the bread price-fixing case.

Oct. 31, 2017: The Competition Bureau says it’s investigating allegations of bread price-fixing and that it was granted search warrants in the case. Several grocers confirm they are co-operating in the probe.

Dec. 19, 2017: Loblaw and George Weston say they participated in an “industry-wide price-fixing arrangement” to raise the price of packaged bread. The companies say they have been co-operating in the Competition Bureau’s investigation since March 2015, when they self-reported to the bureau upon discovering anti-competitive behaviour, and are receiving immunity from prosecution. They announce they are offering $25 gift cards to customers amid the ongoing investigation into alleged bread price-fixing.

Jan. 31, 2018: In court documents, the Competition Bureau says at least $1.50 was added to the price of a loaf of bread between about 2001 and 2016.

Dec. 20, 2019: A class-action lawsuit in a Quebec court against multiple grocers and food companies is certified against a number of companies allegedly involved in bread price-fixing, including Loblaw, George Weston, Metro, Sobeys, Walmart Canada, Canada Bread and Giant Tiger (which have all denied involvement, except for Loblaw and George Weston, which later settled with the plaintiffs).

Dec. 31, 2021: A class-action lawsuit in an Ontario court covering all Canadian residents except those in Quebec who bought packaged bread from a company named in the suit is certified against roughly the same group of companies.

June 21, 2023: Bakery giant Canada Bread Co. is fined $50 million after pleading guilty to four counts of price-fixing under the Competition Act as part of the Competition Bureau’s ongoing investigation.

Oct. 25 2023: Canada Bread files a statement of defence in the Ontario class action denying participating in the alleged conspiracy and saying any anti-competitive behaviour it participated in was at the direction and to the benefit of its then-majority owner Maple Leaf Foods, which is not a defendant in the case (neither is its current owner Grupo Bimbo). Maple Leaf calls Canada Bread’s accusations “baseless.”

Dec. 20, 2023: Metro files new documents in the Ontario class action accusing Loblaw and its parent company George Weston of conspiring to implicate it in the alleged scheme, denying involvement. Sobeys has made a similar claim. The two companies deny the allegations.

July 25, 2024: Loblaw and George Weston say they agreed to pay a combined $500 million to settle both the Ontario and Quebec class-action lawsuits. Loblaw’s share of the settlement includes a $96-million credit for the gift cards it gave out years earlier.

Sept. 12, 2024: Canada Bread files new documents in Ontario court as part of the class action, claiming Maple Leaf used it as a “shield” to avoid liability in the alleged scheme. Maple Leaf was a majority shareholder of Canada Bread until 2014, and the company claims it’s liable for any price-fixing activity. Maple Leaf refutes the claims.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:L, TSX:MFI, TSX:MRU, TSX:EMP.A, TSX:WN)

The Canadian Press. All rights reserved.

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S&P/TSX composite up more than 250 points, U.S. stock markets also higher

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TORONTO – Canada’s main stock index was up more than 250 points in late-morning trading, led by strength in the base metal and technology sectors, while U.S. stock markets also charged higher.

The S&P/TSX composite index was up 254.62 points at 23,847.22.

In New York, the Dow Jones industrial average was up 432.77 points at 41,935.87. The S&P 500 index was up 96.38 points at 5,714.64, while the Nasdaq composite was up 486.12 points at 18,059.42.

The Canadian dollar traded for 73.68 cents US compared with 73.58 cents US on Thursday.

The November crude oil contract was up 89 cents at US$70.77 per barrel and the October natural gas contract was down a penny at US2.27 per mmBTU.

The December gold contract was up US$9.40 at US$2,608.00 an ounce and the December copper contract was up four cents at US$4.33 a pound.

This report by The Canadian Press was first published Sept. 19, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Construction wraps on indoor supervised site for people who inhale drugs in Vancouver

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VANCOUVER – Supervised injection sites are saving the lives of drug users everyday, but the same support is not being offered to people who inhale illicit drugs, the head of the BC Centre for Excellence in HIV/AIDS says.

Dr. Julio Montaner said the construction of Vancouver’s first indoor supervised site for people who inhale drugs comes as the percentage of people who die from smoking drugs continues to climb.

The location in the Downtown Eastside at the Hope to Health Research and Innovation Centre was unveiled Wednesday after construction was complete, and Montaner said people could start using the specialized rooms in a matter of weeks after final approvals from the city and federal government.

“If we don’t create mechanisms for these individuals to be able to use safely and engage with the medical system, and generate points of entry into the medical system, we will never be able to solve the problem,” he said.

“Now, I’m not here to tell you that we will fix it tomorrow, but denying it or ignoring it, or throw it under the bus, or under the carpet is no way to fix it, so we need to take proactive action.”

Nearly two-thirds of overdose deaths in British Columbia in 2023 came after smoking illicit drugs, yet only 40 per cent of supervised consumption sites in the province offer a safe place to smoke, often outdoors, in a tent.

The centre has been running a supervised injection site for years which sees more than a thousand people monthly and last month resuscitated five people who were overdosing.

The new facilities offer indoor, individual, negative-pressure rooms that allow fresh air to circulate and can clear out smoke in 30 to 60 seconds while users are monitored by trained nurses.

Advocates calling for more supervised inhalation sites have previously said the rules for setting up sites are overly complicated at a time when the province is facing an overdose crisis.

More than 15,000 people have died of overdoses since the public health emergency was declared in B.C. in April 2016.

Kate Salters, a senior researcher at the centre, said they worked with mechanical and chemical engineers to make sure the site is up to code and abidies by the highest standard of occupational health and safety.

“This is just another tool in our tool box to make sure that we’re offering life-saving services to those who are using drugs,” she said.

Montaner acknowledged the process to get the site up and running took “an inordinate amount of time,” but said the centre worked hard to follow all regulations.

“We feel that doing this right, with appropriate scientific background, in a medically supervised environment, etc, etc, allows us to derive the data that ultimately will be sufficiently convincing for not just our leaders, but also the leaders across the country and across the world, to embrace the strategies that we are trying to develop.” he said.

Montaner said building the facility was possible thanks to a single $4-million donation from a longtime supporter.

Construction finished with less than a week before the launch of the next provincial election campaign and within a year of the next federal election.

Montaner said he is concerned about “some of the things that have been said publicly by some of the political leaders in the province and in the country.”

“We want to bring awareness to the people that this is a serious undertaking. This is a very massive investment, and we need to protect it for the benefit of people who are unfortunately drug dependent.” he said.

This report by The Canadian Press was first published Sept. 18, 2024.

The Canadian Press. All rights reserved.

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