Trump’s latest Buy American order mostly rhetoric but could harm Canadian businesses: experts

OTTAWA — Donald Trump announced new Buy American policies Tuesday that experts say could hurt Canadian businesses — and he took an opportunity to take a public dig at Canada’s dairy sector in the process.

Although the “Buy American and Hire American” executive order Trump signed appears to contain more rhetoric than immediate action, there are fears American suppliers and distributors who now rely on Canadian input may turn inwards in anticipation of stricter policies down the road.

Even if no change immediately takes place, U.S. firms may start to say, “I might as well just buy American,” warned Milos Barutciski, co-chair of the international trade and investment program at Bennett Jones LLP in Toronto.

“The problem is the tone as much as the legal effect that’s worrisome and that could be injurious to Canadian suppliers,” he said Tuesday, recalling a similar effect when previous president Barack Obama imposed Buy American rules in the wake of the 2008 financial crisis.

Rather than imposing a ton of new rules, the order focuses on plans to increase enforcement and waive exemptions that, up until now — and as required by the North American Free Trade Agreement — have allowed foreign companies to continue bidding for projects alongside American competitors. The order also seeks to tighten rules around the issue of visas for skilled foreign workers.

Waivers and exemptions have been “abused greatly,” a U.S. senior official told reporters Monday. Agencies and departments will be “cracking down” on weak compliance and anti-dumping, and “rooting out every single Buy American loophole,” the official said. Commerce Secretary Wilbur Ross is mandated to submit a report within 220 days, which “will serve as a blueprint for additional executive and regulatory actions.”

The policies spell uncertainty for a wide range of Canadian exporters, selling everything from stationery to construction equipment. The order also specifically promises to bolster American steel, which could affect cross-border infrastructure projects.

“Our leverage is the fact that our firms are highly integrated with U.S. companies. They depend on access to Canadian inputs, whether they’re services or manufactured products or commodities,” said Lawrence Herman, an international trade lawyer based in Toronto.

“That integration, and the fact that we participate so closely in supply chains, gives us an advantage that offshore firms wouldn’t have, certainly not to the same extent.”

Herman said he believes this is a harbinger for “aggressive” NAFTA negotiations to come, and impacts would “run the gamut” across Canadian manufacturing and service industries.

Before signing the order Tuesday, Trump gave a speech railing against international trade agreements, called NAFTA a “disaster” and specifically rebuked Canada for “unfair” dairy rules that affect people in Wisconsin, where he made the announcement.

“Very, very unfair. It’s another typical one-sided deal against the United States and it’s not going to be happening for long,” Trump said. “We’re going to call Canada and we’re going to say, ‘what happened?’ ”

A letter from Canadian ambassador to the U.S. David MacNaughton, dated Tuesday, reacted to Trump’s comments contesting the idea that “Canada’s dairy policies are the cause of financial loss for dairy farmers in the United States.”

“The facts do not bear this out,” MacNaughton said in the missive sent to New York and Wisconsin governors, chastising the Americans for laying “blame where it does not belong.”

“Canada upholds our international trade obligations,” the letter states pointedly, including permitting duty-free and quota-free access to the Canadian market for certain American milk products.

In the face of potential restrictions on Canadian exports to the U.S., whether through “Buy American” policies or a possible border-adjustment tax, MacNaughton explained Canada has not taken any of its own actions to limit U.S. imports, and Canada’s dairy sector is “less protectionist” than America’s.

“The Canada-U.S. partnership is a model to the world. Let’s keep it that way,” the letter concludes.

While it is assumed complaints centre on supply management, a system of subsidies for Canadian dairy producers, there are other trade intricacies at play. A year ago, Ontario farmers cut prices for a concentrate product called ultrafiltered milk. Unlike most other dairy products, U.S. farms were able to export it to Canada without major tariff issues, but the new pricing from Canadian farms has caused major losses.

Specific trade spats such as that one, along with more systemic complaints such as supply management, may come up during NAFTA negotiations.

Rhetoric around NAFTA and Buy American/Hire American is part of a bigger protectionist narrative out of the U.S. administration that the Canadian government has been trying to counter.

mdsmith@postmedia.com | Twitter:

Alberta-based Parkland Fuel buying Chevron Canada fuel business for nearly $1.5B

Parkland Fuel Corp. says it will pay $1.46 billion to acquire Chevron Canada’s fuel business, including 129 gas stations in the Vancouver area and a refinery in Burnaby, B.C.

The Red Deer, Alta.-based company says the new stations will complement its existing 44 Chevron-branded sites in British Columbia and cement its position as one of Canada’s largest fuel retailers with more than 1,800 service stations.

The sale also involves 37 commercial cardlock and three marine fuelling locations, as well as three terminals in B.C. and a wholesale business that includes aviation fuel sales to the Vancouver International Airport.

Parkland CEO Bob Espey says the acquisition will support Parkland’s existing operations in B.C., leading to between $35 million and $50 million in annual cost savings after closing.

Parkland plans to issue 24 million shares to raise $660 million to help finance the deal.

The deal is expected to close by mid-year.

Parkland Fuel buying Chevron Canada fuel business for nearly $1.5B

The Chevron refinery in Burnaby, B.C.
Ward Perrin / Vancouver Sun

Parkland Fuel Corp. says it will pay $1.46 billion to acquire Chevron Canada’s fuel business, including 129 gas stations in the Vancouver area and a refinery in Burnaby, B.C.

The Red Deer-based company says the new stations will complement its existing 44 Chevron-branded sites in British Columbia and cement its position as one of Canada’s largest fuel retailers with more than 1,800 service stations.

The sale also involves 37 commercial cardlock and three marine fuelling locations, as well as three terminals in B.C. and a wholesale business that includes aviation fuel sales to the Vancouver International Airport.

Parkland CEO Bob Espey says the acquisition will support Parkland’s existing operations in B.C., leading to between $35 million and $50 million in annual cost savings after closing.

Parkland plans to issue 24 million shares to raise $660 million to help finance the deal.

The deal is expected to close by mid-year.

Chevron Sells Canada Refinery, Gas Stations in $1.1 Billion Deal

(Bloomberg) — Chevron Corp. agreed to sell the Burnaby refinery and gas stations in British Columbia to Parkland Fuel Corp. for about C$1.46 billion ($1.1 billion) as Chief Executive Officer John Watson unloads assets.

The sale includes 129 retail service stations, 37 commercial cardlock and three marine fueling locations, Red Deer, Alberta-based Parkland said in a statement Tuesday. Parkland also is picking up terminals throughout British Columbia and a wholesale business that provides aviation fuel to Vancouver International Airport.

The sale is part of Watson’s plan to raise as much as $10 billion from asset sales this year. The company has been marketing everything from Asian oil fields to African storage facilities to generate cash. For Parkland, the deal complements the 44 Chevron-branded sites it has in the province, and builds on the $750 million acquisition of CST Brands Inc.’s Canadian assets that it expects to complete this quarter.

Shares of San Ramon, California-based Chevron were little changed at $105.61 at 4:33 p.m. in late trading in New York. Parkland fell 0.7 percent to C$28.86 in regular trading in Toronto, before the stock was halted pending the announcement.

–With assistance from Joe Carroll

©2017 Bloomberg L.P.

BRIEF-Parkland to buy Chevron Canada’s downstream fuel business

Parkland Fuel Corp:

* Parkland to acquire Chevron Canada’s downstream fuel
business

* Parkland Fuel Corp – subject to satisfaction of customary
closing conditions, parkland will pay approximately $1,460
million

* Parkland Fuel Corp says Parkland expects to reduce its
leverage ratio to well within its previous guidance by 2019

* Parkland Fuel Corp says Parkland expects to replace bridge
facility with alternative longer term debt prior to closing of
acquisition

* Parkland Fuel – total identified annual run-rate
synergies of $35-$50 million, resulting in total estimated
normalized ebitda of $265-$280 million from deal

* Parkland Fuel Corp – Parkland will pay an estimated $186
million in working capital for acquired business

* Parkland fuel – intends to enter into working capital
financing agreement with merrill lynch commodities to finance
hydrocarbon inventory & receivables

* Parkland Fuel corp says 30%+ accretion to 2016
distributable cash flow per share on a run-rate, normalized
basis from deal

* Parkland Fuel- entered into agreement with underwriters
bookrun by TD Securities inc., National Bank Financial inc., to
sell about 24 million shares

* Parkland Fuel Corp – entered into an agreement with
chevron canada limited to acquire all of shares of chevron
canada r&m ulc

* Parkland Fuel Corp – Parkland expects to close cst
acquisition in q2 2017
Source text for Eikon:
Further company coverage:

How the CFTA can revolutionize Canada’s procurement system

Lee Barter is a partner with Deloitte, where he leads the Sourcing and Procurement Consulting practice.

The Canadian Free-Trade Agreement (CFTA) was announced last week, shedding light on the mechanics for liberalizing domestic trade. While the CFTA ushers in several positive developments, the clauses opening up government procurement – a pot totalling 25 per cent of government spending – require more work to achieve the agreement’s ambitions.

The need for improved government procurement rules has assumed greater urgency following the recent approval of the Canada-EU trade agreement (CETA). Without the CFTA, Canadian businesses would have been disadvantaged against European firms outside their home provinces. A provision within CETA requires that Canada create a single point of access for government tenders. This sweeping provision will funnel $100-billion of spending into an online portal for the convenience of European companies that can soon bid for government contracts with the same standing as Canadian companies. The new CFTA stipulates that the forthcoming CETA portal may be adapted to advance domestic goals also.

Viewed by some policy makers as a threat to Canadian firms in the face of rising European competition, the CETA portal had to be good, but not too good (what if EU companies started winning too often?). However, the CFTA appropriately recasts the single point of access in domestic terms and allows policy makers to reimagine how government purchasing can serve Canada’s interests, not just comply with international obligations.

If the opportunity is grasped, a national tendering system offers a pathway to modernization. For example, most government bidding is done offline, denying government, businesses and citizens a vast amount of valuable information. In this vacuum, no Canadian government can presently muster the data to define a “local supplier,” let alone detail how much spending goes to these businesses (ironic, considering the CFTA was built to eliminate biases favouring these firms).

The value of procurement data goes beyond tallying winners and losers. Digitizing competitions could save money for public agencies, particularly small entities that pay more for goods and services compared with large governments. Digitizing tender packages – time-consuming for buyers and frustrating for suppliers – could lead to greater innovation by sharing best practices and collecting supplier feedback (blunting a spike in bid protests in the process).

The benefits of bringing public buying into the digital age extends to suppliers, particularly innovative startups that are largely shut out of government contracting. The time-consuming process of responding to government tenders systematically tilts the procurement process in favour of large enterprises, including – perhaps inadvertently – European multinationals. Allowing bidders to maintain and reuse a digital profile would reduce paperwork and allow small businesses to compete for – and win – a larger share of government contracts.

Implied by combining CFTA requirements into the CETA portal is that Canadians won’t be disadvantaged against Europeans for local contracts. But a true levelling of the playing field would help Canadian firms find and win business abroad. A tiny fraction of Canadian businesses export in spite of hard-won trade concessions to open up foreign markets. A bolder, more courageous approach would promote and support domestic firms bidding for government contracts in Europe and beyond.

The power of the public purse is massive, yet poorly understood. The Organisation for Economic Co-operation and Development estimates that government purchases – from airplanes to paper clips – represent 12 per cent of Canada’s GDP. Governments spend money to deliver programs and services to Canadians, but the potential for second-order benefits from the way it is spent, is real.

The cost of our broken procurement system is likewise clear, which is why it is critical that government follows through on the promise and potential of the CFTA. Today, Canada’s most dynamic companies look to governments such as Britain or the United States, who are vastly more open to acquiring innovative new products or co-developed solutions. When Canadian businesses can’t access local procurement markets, companies miss a vital opportunity to gain a strategic customer and Canadians miss out on better services. The CFTA creates a chance for a more digital and integrated procurement policy to emerge in Canada – we must grasp it.



Report Typo/Error

Follow us on Twitter: @GlobeBusiness

Canada’s landmark polygamy case goes to court Tuesday



Winston Blackmore, leader of the breakaway Mormon community of Bountiful in southeastern British Columbia, refused to acknowledge the charge against him, forcing the court to record a not guilty plea, the Canadian Broadcasting Corp reported.



Blackmore, 61, is accused of practicing “a form of polygamy” or “a kind of conjugal union” with 24 women between 1990 and 2014, according to court documents.



Co-accused James Oler, 53, faces the same charge involving four women between 1993 and 2009, the documents show. Oler entered a not guilty plea.



The British Columbia government has been weighing prosecution since the early 1990s under Canada’s century-old polygamy law.



But despite multiple police investigations, it had declined to pursue polygamy charges due to concerns that doing so would violate constitutional freedoms of religion.



In 2009, however, the government charged Blackmore and fellow sect member Oler with polygamy. Two years later, the Supreme Court affirmed that these charges were constitutional.



Blackmore’s defense counsel argues that the polygamy law violates the community members’ religious rights.



The two men face one count each of polygamy. None of the charges have been proven in court. The case is being heard in Cranbrook, British Columbia and is expected to take several weeks.





(Reporting by Anna Paperny in Toronto; Additional reporting by Nicole Mordantin Vancouver; Editing by Stephen Coates)


Go to Source