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New U.S. trade report predicts modest economic gains from new NAFTA

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OTTAWA — With Washington riveted to the Mueller report, a comprehensive economic assessment of the new North American free trade deal quietly emerged Thursday, predicting less-than-stellar economic gains for the United States.

Moreover, the much anticipated report of the U.S. International Trade Commission undercut the Trump administration’s rationale for forcing a renegotiation of the North American Free Trade Agreement, said one leading Canadian trade lawyer. 

The new report arrived in the face of rising doubts in some quarters about the real impact of the U.S.-Mexico-Canada Agreement, or USMCA, and with political roadblocks to ratification piling up in all three countries. The trade commission tome — all 379 pages of it — landed Thursday after being delayed months by the 35-day shutdown of the American federal government.

Its findings are significant because it is widely viewed as a neutral body that can provide a sober assessment of the economic merits of the new deal, which faces growing opposition — primarily from Democrats who want to deny Trump a political victory on a trade deal he sees as positive.

The commission predicted modest economic growth in the U.S. as a result of the agreement — a 0.35 per cent increase in gross domestic product and 176,000 new jobs, an increase of just 0.12 per cent.

“That’s it? All this time and all this headache, and the disruption to the North American supply chain and to the companies for the sake of 176,000 jobs?” said Cyndee Todgham Cherniak, a Toronto-based international trade lawyer.

The report also predicted that U.S. exports to Canada would increase by $19.1 billion, and that U.S. imports from Canada would also increase by the exact amount — $19.1 billion.

Todgham Cherniak said the identical figures debunk the American raison d’etre for renegotiating NAFTA — that the U.S. was suffering under an unfair trade deficit that needed correcting.

“The trade deficit issue is completely neutralized.”

That figure was not lost on Foreign Affairs Minister Chrystia Freeland, who railed repeatedly in the long NAFTA talks against the U.S. argument that it was facing a trade deficit.

“According to that main U.S. report, what they’re saying is the new NAFTA benefits both countries … I think that is a classic win-win outcome,” she told reporters at the Algoma Steel plant in Sault Ste. Marie, where she continued to decry “illegal” U.S. tariffs on Canadian steel and aluminum.

In the crucial auto sector, the assessment was positive but with one caveat: it might make autos more expensive for consumers because of new content rules that would prevent the use of cheaper, foreign parts — something Trump has railed against as being a job killer in the U.S.

The complicated content formula for what constitutes a North American-made auto — known as rules of origin — and updated labour provisions aimed at Mexico were key issues in the contentious NAFTA renegotiation.

The new deal “would strengthen and add complexity to the rules of origin requirements in the automotive sector by increasing regional value content (RVC) requirements and adding other requirements.”

It would increase the production of automotive parts and create new jobs, but also “lead to a small increase in the prices and small decrease in the consumption of vehicles in the United States.”

Dan Ujczo, a trade lawyer and Canada-U.S. specialist in Columbus, Ohio, said the analysis confirms that the U.S. is never going to get a better deal with Canada and Mexico than the current agreement. But he suggested it’s all probably moot given the wider political turmoil unleashed by the Mueller report, which examines whether the Trump campaign colluded with Russia to meddle in the 2016 presidential election.

“Unfortunately, today’s other report is going to consume Washington for the remainder of the spring and likely stall consideration by Congress in 2019,” Ujczo said.

The Trump administration anticipated the arrival of the trade commission’s unvarnished assessment by launching a new charm offensive to sell the merits of the new free trade pact, and to counter growing skepticism about the economic benefits of the deal.

The U.S. Trade Representative said Thursday the new, yet-to-be-ratified deal will bring auto jobs back to the U.S. from Mexico. In a new nine-page “white paper,” it said the new continental trade deal will generate $57 billion in new auto manufacturing investments and create 76,000 new jobs in the American automotive sector in the next five years.

A senior USTR official, who briefed journalists on the condition of anonymity, dismissed a report from the International Monetary Fund last month which said the new rules of origin and the labour provisions would lead to a decline in vehicle production in all three countries.

The new USTR report, however, made no mention of the punishing steel and aluminium tariffs that Trump imposed on Canadian and Mexican steel imports — duties both countries cite as obstacles to ratifying the new pact.

Flavio Volpe, the president of the Canadian Automotive Parts Manufacturers’ Association, said that there is no way that the U.S. automakers came meet the new content requirements for autos with tariffs of 25-per-cent and 10-per-cent on Canadian and Mexican steel and aluminum still in place.

“You can get there, but you won’t get there profitably,” said Volpe.

Mike Blanchfield, The Canadian Press


Alberta

Insurance rate increases absolutely unacceptable: NDP Critic for Service Alberta

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This post was submitted by Jon Carson, NDP MLA for Edmonton-West Henday, Opposition Critic for Service Alberta

Thirty per cent.

That’s how much auto insurance rates skyrocketed by for some Albertans at the end of this year, after Premier Jason Kenney and the UCP removed the five per cent cap on rate increases that our NDP government brought in, taking a “no limit” approach to how much insurance companies could actually raise rates.

The jump was immediate.

Albertans saw a wave of premium increases bordering on price gouging. Over 90% of car insurance companies filed for rate increases as soon as the cap was lifted, and rushed to bill drivers as soon as they could. Of the companies that received approved rate changes, the increases ranged from 4.9 per cent to an eye-popping 29.8 per cent.

It was a nice gift from Jason Kenney, who already slammed families for hundreds of dollars of new costs in his fall budget, including hikes to income tax, property tax, as well as more in school fees, prescription drugs and college tuition.

As usual, Finance Minister Travis Toews trotted out the UCP’s one-trick pony and blamed the NDP, claiming that insurance companies were set to pack their bags and flee the province if he didn’t let them jack up premiums beyond five per cent.

The lobbying effort came out in full force. The brokers, the insurance companies, and the Insurance Bureau of Canada are working overtime to sell quite the sob story: a massive spike in claims costs, not enough options for drivers, etc, etc. It’s tough times for the poor, little ol’ car insurance company.

What a load. These are some of the biggest and most profitable companies in Canada, and they simply want back the power they had to jack up premiums hand over fist.

The truth is that claims costs over the past few years are level, a fact that’s supported by the Insurance Bureau of Canada‘s own data. In fact, an actuarial analysis by Fair Alberta Injury Regulators, an organization made up of concerned Albertans, doctors and legal experts, found that injury payouts have stabilized in the last few years, and even started to dip in 2019. Their actuary specifically found evidence that claims are “not skyrocketing.”

This is further supported by the Alberta Superintendent of Insurance, responsible for all regulatory oversight of insurers operating in Alberta with a specific duty to ensure that insurance companies treat Albertans fairly. In his annual report for 2018, he found on average that the claims ratio for car insurance was 80 per cent across all companies in Alberta. Not the 120 per cent figure the insurance companies trot out on TV.

And while the UCP Government continues to claim they have documents to prove the cap made the car insurance industry unsustainable, they haven’t provided a single piece of paper showing any of these companies would bail if they could–GASP–only raise premiums five per cent every year.

So why remove the cap? Well, in politics, it’s who you know. And Jason Kenney knows an awful lot of people in the insurance industry. Namely, his former chief of staff and campaign director Nick Koolsbergen, who was hired to lobby the Premier on behalf of the car insurance industry just last year. He has Kenney’s cell phone number.

Sounds like a good guy to have on your side… if you’re a car insurance company.

The fact is, these companies turn a profit of tens of millions of dollars each year. They’re used to having carte blanche in Alberta, and they want it back.

Under the thinly-veiled guise of “red tape reduction”, the UCP has struck a panel looking at more regulatory changes that the insurance lobby itself has said “could also change the rate regulation framework that governs how insurers set premiums.”

If costs are going to go up even more, who will Jason Kenney look out for? His friends and interests in big insurance? Or everyday Albertans driving to work?

Knowing Jason Kenney, Albertans should brace for impact.

Jon Carson is the MLA for Edmonton-West Henday and the Alberta NDP Opposition Critic for Service Alberta.

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Automotive

Is it time for a Wheel Alignment?

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Bad roads can be your wheels’ worst enemy. If you drive down poorly maintained roads, drive through potholes, or even hit a curb, your alignment can be greatly affected. This can cause even the slightest, tiniest alignment issue, which can accelerate uneven tire wear. Make sure you have your alignment checked every 9,500 km or every other oil change. Your tires and your wallet will thank you later. Uneven tire wear is a symptom of bad wheel alignment. Ideally, tires should wear evenly across the tread. If you’re noticing excessive wear on the rear inside tires, you may have too much junk in the trunk or need an alignment adjustment.

Uneven tire wear can also result in less KPL’s and more pain at the gas pump. How will a wheel alignment help my vehicle? Repeat after us: A wheel alignment ensures optimal drivability. It will help your tires last longer, your vehicle drive smoother, ultimately keeping your wheels pointed in the right direction. And, when it drives more smoothly, it’s smooth sailing—or should we say cruising—ahead. Plus, your car will require less energy to keep going, potentially saving a ton of fuel depending on how much alignment was required. Tires are expensive. Keeping them aligned isn’t.

How will a wheel alignment help my vehicle?

Repeat after us: A wheel alignment ensures optimal drivability. It will help your tires last longer, your vehicle drive smoother, ultimately keeping your wheels pointed in the right direction. And, when it drives more smoothly, it’s smooth sailing—or should we say cruising—ahead. Plus, your car will require less energy to keep going, potentially saving a ton of fuel depending on how much alignment was required. Tires are expensive. Keeping them aligned isn’t.

How can I tell if my car’s alignment is off?

There are some noticeable signs that could indicate a misalignment. Just use your eyes, ears and hands. Your senses (and even the good old personal hunch) are good human capital for spotting poor alignment. Here are some common signs that you are dealing with wheels with poor alignment:

• Vehicle pulling to the left or right

• Uneven or rapid tire wear

• Your steering wheel is crooked when driving straight

• Squealing tires

Call to book 403.343.6633 or book your appointment at kippscott.ca

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september, 2020

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