In this file:
· Bank of Canada Maps Out Potential Impact of Global Trade Wars
· B.C. meat producers push for quick end to export ban
Bank of Canada Maps Out Potential Impact of Global Trade Wars
Tension already creating C$18 billion hole in domestic economy
Simulations suggest U.S. is better insulated against conflict
By Luke Kawa, Bloomberg
July 10, 2019
The Bank of Canada has begun to count the potential costs of escalating trade wars on the nation’s economy in a series of analyses released Wednesday as part of a rate decision in which tensions featured prominently.
Here are how their scenarios play out:
The trade war is already creating an C$18 billion ($13.7 billion) crater in the Canadian economy, according to the central bank.
The fallout from higher tariffs between the U.S. and China prompted the Bank of Canada to increase its estimate for how much the enduring clash over cross-border commerce is weighing on domestic and global exports as well as business investment relative to April.
These negative effects, plus China’s import restrictions on Canadian canola and meat, more than offset the positive impact from the withdrawal of American tariffs on steel and aluminum and optimism surrounding the passage of the renegotiated North American free trade agreement.
This uncertainty means Canadian exports will be 1.5% lower by the end of 2021 than would otherwise be the case, and capital spending will be curbed by 3% over the same time frame, the bank said.
The quarterly Monetary Policy Report also mapped out estimates for how much better or worse the picture could get as the situation evolves.
Trade conflict remains the top risk to the central bank’s outlook. Although it’s a two-sided concern, the potential effects are asymmetric -- and Canada is twice as exposed to the swings as the world at large.
If all protectionist measures were rolled back and the uncertainty surrounding the multilateral trading order disappeared, global activity would be roughly 1% higher by the end of 2021 relative to current forecasts, and the Canadian economy would be about 2% larger.
Yet in an all-out trade war in which every country in the world were to impose 25% levies on imported goods, the Canadian economy would be 6% smaller relative to the base case, with the global economy taking a 3% hit. The simulation suggests commodity prices would fall by 30% while the Canadian dollar depreciates by 25%.
Protectionism is difficult for monetary policy to respond to, policy makers said, as the negative supply shock entails higher prices but lower activity.
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B.C. meat producers push for quick end to export ban
Industry leaders cite China’s domestic meat-supply issues in call to remove barriers to Canadian pork, beef
By Chuck Chiang, Business in Vancouver (BIV)
July 10, 2019
B.C.'s beef and pork producers are hoping for a quick resolution to the ban placed by Beijing on Canadian meat exports in late June, but officials also note that China’s meat-supply situation may compel Chinese authorities to lift the ban anyway.
The response comes after China banned all Canadian meat imports as of June 26, citing the discovery of false veterinary certificates after customs officials found ractopamine in Canadian pork bound for the Chinese market. The food additive is banned in China and the European Union but legal in Canada, the United States and Japan.
Jack DeWit, chairman of the BC Pork Producers Association, said B.C. has only about 15 pork producers left, compared with hundreds or more in provinces like Quebec and Manitoba. But prolonged disruptions to exports to China would have a ripple effect on B.C. because products from other parts of Canada originally marked for China would then need to find an outlet elsewhere, creating a supply glut.
“Big or small, a producer has to be able to get rid of their stock,” DeWit said. “Across all the provinces, we export about 70% of what we produce. So when there’s an interruption in trade, it affects everybody. We are not a big part of it anymore, but we are still a part of it; and what happens in other parts of Canada affects the producers we have here, too.”
According to the Canadian Pork Council, China, the world’s largest consumer of pork, is Canada’s second-largest export destination by tonnage (283,216 tonnes in 2018, behind the United States at 346,834 tonnes) and third-largest by value ($514 million last year). Before the ban announced in late June, pork exports to China had increased 50% year-over-year in 2019, partially because Chinese domestic supply has been stricken by the African swine flu.
B.C.’s pork production amounted to 516,915 hogs in 2017, far below major producers in Quebec (8.7 million), Manitoba (5.4 million) and Ontario (4.1 million).
DeWit also noted that Beijing might be forced to accept high-quality Canadian pork over the long run because the African swine flu epidemic in China, which has also hit Vietnam and some surrounding Asian countries, has caused Chinese producers to cull as many as 1.1 million pigs thus far this year.
Some experts are calling the epidemic the largest animal disease outbreak in history. The disease is harmless to humans but is deadly and highly contagious among pigs.
The sudden shortage of pork has pushed global pork prices up by as much as 40% this year, and DeWit echoed the Canadian Pork Council’s statement that the “halt in Canadian exports is not the result of a food safety concern but the misuse of Canada’s reputation as a supplier of safe quality products.”
“China very much needs our pork at this point,” DeWit said. “They’ve lost a lot of their own production, so they are looking to buy…. We are not selling over there because we have to or at lower prices; we are selling there because we have a good product. They want it, and they are willing to pay for it. The Chinese want it resolved as much as we do.”
According to a statement from the Chinese Embassy in Ottawa, the ractopamine investigation conducted by customs officers found there were 188 forged veterinary health certificates attached to Canadian pork shipments. It added that the discovery “reflects that the Canadian meat export supervision system [has] obvious safety loopholes.”
In response, Canada’s agriculture minister, Marie-Claude Bibeau, and international trade diversification minister, Jim Carr...