Trade ministers from the United States, Canada and Mexico said on Tuesday they held “robust” talks on the new North American trade deal and pledged to fully enforce its higher standards, while downplaying differences over a range of other irritants.
The ministers, in a joint statement issued after their first meeting to review the U.S.-Mexico-Canada Agreement on trade that took effect in July 2020, also vowed to focus on fighting climate change and crack down on imports of goods to the region made with forced labor.
“The USMCA commits us to a robust and inclusive North American economy that serves as a model globally for competitiveness, while prioritizing the interests of workers and underserved communities,” the ministers said.
The statement came after U.S. Trade Representative Katherine Tai met virtually with Mexican Economy Minister Tatiana Clouthier and Canadian Trade Minister Mary Ng in the initial meeting of the governing body for the trade deal, which regulates some $1.5 trillion in annual North American trade.
Their statement described discussions on new labor and environmental obligations as “robust.”
Tai had earlier urged her counterparts to pursue strong implementation of the USMCA to ensure that it would maintain political support.
“For this agreement to be durable, it must serve the needs of everyday people – not just in the United States, but in Mexico and Canada as well. That will only happen if we deliver on our promises,” Tai said.
The USMCA replaced the 1994 North American Free Trade Agreement, adding chapters on environmental, labor and digital commerce standards and considerably tighter regional automotive content rules.
Over two days of bilateral and joint virtual meetings, the three ministers brought up long-standing complaints and ones that have cropped up over the past year, with Tai chiding Canada over a proposed digital tax and Ottawa’s allocation of dairy quotas.
Ng told reporters that she raised Canada‘s concerns about “unwarranted and unfair” U.S. lumber tariffs and vowed to defend the sector’s interests. On Monday, she brought up U.S. “Buy American” restrictions on infrastructure and public procurement projects.
Mexico raised differences between the U.S. interpretation of the USMCA’s automotive content rules and the more flexible Mexican and Canadian interpretations, said Mexican Deputy Economy Minister Luz Maria de la Mora, adding that the countries would continue to discuss the matter.
She also said Mexico asked the United States to review its ground transportation rules to ensure that Mexican truckers had access to the U.S. market – a longtime complaint from Mexico City.
But those issues were not mentioned in the joint statement, which focused on cooperation to implement new labor, environmental and digital economy rules and reaching out to underrepresented groups.
The ministers said officials from the three countries plan to meet with small-business owners in October in San Antonio to promote inclusion in USMCA’s benefits.
“This was primarily an opportunity to take stock of the new agreement, think about how it works, and … lay out the priorities of the three countries,” said a senior U.S. trade official, adding that further high-level meetings would likely take place in coming years. Although the USMCA did not include a climate-change chapter at the insistence of the Trump administration, the official said Tuesday’s talks included substantial discussion of climate-change matters. The United States highlighted the importance of labor issues during the meetings, and said Mexico’s response to a potential labor rights violation associated with a union contract vote at a General Motors Co truck plant in the central Mexican city of Silao showed “how well this can be used by both countries.”
(Reporting by David Lawder and Andrea Shalal; Additional reporting by David Ljunggren in Ottawa and Sharay Angulo in Mexico City; Editing by Dan Grebler and Peter Cooney)
Toronto Stock Exchange hits record high on energy boost
* The energy sector climbed 1% tracking crude prices, which were buoyed by expectations that demand will recover rapidly in the second half of 2021. [O/R]
* The Fed kicks off its two-day meeting on Tuesday, and officials are faced with ongoing tension between their two main goals, as inflation rises faster than expected even with millions of Americans still unemployed.
* At 9:38 a.m. ET (1338 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 77.55 points, or 0.38%, at 20,235.2, an all-time high.
* Producer prices in Canada most likely rose 3.1% in May from April, pushed higher mainly by softwood lumber, Statistics Canada said in a preliminary flash estimate.
* The materials sector, which includes precious and base metals miners and fertilizer companies, lost 0.4%.
* On the TSX, 163 issues were higher, while 61 issues declined for a 2.67-to-1 ratio favoring gainers, with 17.47 million shares traded.
* The largest percentage gainer on the TSX was BRP Inc, which jumped 4.6%, after the insurance distribution company issued a $350 million worth substantial issuer bid.
* Its gains were followed by Aritzia Inc, which rose 4.5%, after the apparel retailer acquired 75% of the athletic apparel maker Reigning Champ in deal worth $63 million
* Miners First Quantum Minerals Ltd and Hudbay Minerals Inc, fell the most on the TSX, down 4.1% and 3%, respectively.
* The most heavily traded shares by volume were Canadian Natural Resources Limited, BCE Inc and Auxly Cannabis Group Inc.
* The TSX posted 18 new 52-week highs and no new low.
* Across all Canadian issues there were 102 new 52-week highs and five new lows, with total volume of 32.21 million shares.
(Reporting by Amal S in Bengaluru; Editing by Amy Caren Daniel)
Canadian dollar hits 7-week low
The Canadian dollar weakened against its U.S. counterpart on Tuesday as investors weighed prospects of the Federal Reserve turning less dovish, with the commodity-linked currency extending its pullback from a recent six-year high.
The loonie was trading 0.4% lower at 1.2192 to the greenback, or 82.02 U.S. cents, after earlier touching its weakest level since May 6 at 1.2204. Earlier this month, it touched its strongest in six years at 1.2007.
“We’ve had such a strong move with commodity currencies and that trade has been slowly getting unwound,” said Edward Moya, a senior market analyst at OANDA in New York.
“We are starting to see a little bit more of an expectation that you are going to have a slightly less dovish Fed tomorrow and the commodity trade could continue to get undone a little bit,” Moya added.
In a new policy statement and economic projections due on Wednesday, the Fed is expected to acknowledge the first conversations among its policymakers about when and how fast to pare back the massive bond-buying program launched last year.
The program has supported global economic recovery, boosting commodity prices. Canada is a major producer of commodities, including copper and oil.
Copper fell 4%, extending its pullback from a record high in May. Oil settled 1.8% higher at $72.12 a barrel.
Canadian housing data for May was mixed. Housing starts climbed 3.2% compared with the previous month, while home sales were down for a second month after a blazing start to the year.
Canadian consumer price data is due on Wednesday, which could offer clues on the Bank of Canada policy outlook.
The Canadian 10-year yield was little changed at 1.389%. On Monday, it touched its lowest intraday level in more than three months at 1.365%.
(Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter Cooney)
G7 nations to boost climate finance
G7 leaders agreed on Sunday to raise their contributions to meet an overdue spending pledge of $100 billion a year by rich countries to help poorer countries cut carbon emissions and cope with global warming, but only two nations offered firm promises of more cash.
Alongside plans billed as helping speed infrastructure funding in developing countries and a shift to renewable and sustainable technology, the world’s seven largest advanced economies again pledged to meet the climate finance target.
But climate groups said the promise made in the summit’s final communique lacked detail and the developed nations should be more ambitious in their financial commitments.
In the communique, the seven nations – the United States, Britain, Canada, France, Germany, Italy and Japan – reaffirmed their commitment to “jointly mobilise $100 billion per year from public and private sources, through to 2025”.
“Towards this end, we commit to each increase and improve our overall international public climate finance contributions for this period and call on other developed countries to join and enhance their contributions to this effort.”
After the summit concluded, Canada said it would double its climate finance pledge to C$5.3 billion ($4.4 billion) over the next five years and Germany would increase its by 2 billion to 6 billion euros ($7.26 billion) a year by 2025 at the latest.
There was a clear push by leaders at the summit in southwest England to try to counter China’s increasing influence in the world, particularly among developing nations. The leaders signalled their desire to build a rival to Beijing’s multi-trillion-dollar Belt and Road initiative but the details were few and far between.
Johnson, host of the gathering in Carbis Bay, told a news conference that developed nations had to move further, faster.
“G7 countries account for 20% of global carbon emissions, and we were clear this weekend that action has to start with us,” he said as the summit concluded.
“And while it’s fantastic that every one of the G7 countries has pledged to wipe out our contributions to climate change, we need to make sure we’re achieving that as fast as we can and helping developing countries at the same time.”
Some green groups were unimpressed with the climate pledges.
Catherine Pettengell, director at Climate Action Network, an umbrella group for advocacy organisations, said the G7 had failed to rise to the challenge of agreeing on concrete commitments on climate finance.
“We had hoped that the leaders of the world’s richest nations would come away from this week having put their money their mouth is,” she said.
Developed countries agreed at the United Nations in 2009 to together contribute $100 billion each year by 2020 in climate finance to poorer countries, many of whom are grappling with rising seas, storms and droughts made worse by climate change.
That target was not met, derailed in part by the coronavirus pandemic that also forced Britain to postpone the U.N. Climate Change Conference (COP26) until later this year.
The G7 also said 2021 should be a “turning point for our planet” and to accelerate efforts to cut greenhouse gas emissions and keep the 1.5 Celsius global warming threshold within reach.
European Commission President Ursula von der Leyen said the G7 leaders had agreed to phase out coal.
The communique seemed less clear, saying: “We have committed to rapidly scale-up technologies and policies that further accelerate the transition away from unabated coal capacity, consistent with our 2030 NDCs and net zero commitment.”
The also pledged to work together to tackle so-called carbon leakage – the risk that tough climate policies could cause companies to relocate to regions where they can continue to pollute cheaply.
But there were few details on how they would manage to cut emissions, with an absence of specific measures on everything from the phasing out of coal to moving to electric vehicles.
Pettengell said it was encouraging that leaders were recognising the importance of climate change but their words had to be backed up by specific action on cutting subsidies for fossil fuel development and ending investment in projects such as new oil and gas fields, as well as on climate finance.
British environmentalist David Attenborough appealed to politicians to take action.
“We know in detail what is happening to our planet, and we know many of the things we need to do during this decade,” he said in a recorded video address to the meeting.
“Tackling climate change is now as much a political and communications challenge as it is a scientific or technological one. We have the skills to address it in time, all we need is the global will to do so.”
($1 = 1.2153 Canadian dollars)
(Reporting by Elizabeth PiperAdditional reporting by William James and Kate Abnett in Brussels and Andreas Rinke in BerlinEditing by William Maclean, Raissa Kasolowsky and Frances Kerry)
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