PROFITEERING

Canada's Competition Bureau obtains court orders in investigation into Loblaw, Sobeys owners

Rosa Saba, The Canadian Press

The Competition Bureau says it has obtained two court orders requiring the parent companies of Loblaws and Sobeys to hand over information related to its investigation into alleged anticompetitive conduct. Shoppers at a west-end Toronto Sobeys grocery store, Sunday, June 26, 2023. THE CANADIAN PRESS/Graeme Roy

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The Competition Bureau has obtained two court orders requiring the parent companies of Loblaws and Sobeys to hand over information related to its investigation into alleged anticompetitive conduct. 

The bureau is investigating the use of property controls in the grocery sector, which are clauses in lease agreements that restrict other potential tenants and their activities.

The bureau said these controls are hampering competition in the grocery sector.

The competition commissioner applied in Federal Court in May to order Empire Cos. Ltd. and George Weston Ltd. to hand over records about real estate holdings, lease agreements, customer data and other records.

The bureau said Tuesday this information will help determine whether Sobeys and Loblaw are imposing anticompetitive restrictions that negatively affect competition in the grocery industry. It said there is no conclusion of wrongdoing at this time. 

Spokespeople for Empire and George Weston did not immediately respond to requests for comment. 

Empire previously pushed back against the investigation, saying in a separate court application that the probe gives the commissioner “the appearance of a lack of independence." It denied that property controls are anticompetitive. 

In May, the Competition Bureau said it had filed a motion to strike Empire’s application for judicial review.

Spokeswoman Sarah Brown confirmed Tuesday that motion was granted, but said Empire is appealing the decision. 

Loblaws’s parent company is co-operating with the bureau’s review, spokeswoman Catherine Thomas said in May on behalf of George Weston Ltd.

"Restrictive covenants are very common in many industries, including retail. They help support property development investments, encouraging opening of new stores and capital risk-taking," she said in a statement at the time. 

The commissioner’s probe is focused on the companies’ operations in Halifax, but also more broadly across the country.

The court documents filed in May describe Empire’s and George Weston’s holdings in real estate investment trusts, or REITs, which count the companies’ own grocery banners as major tenants.

Through a subsidiary, Empire holds a 41.5-per-cent interest in Crombie Real Estate Investment Trust, while George Weston has a controlling ownership interest of 61.7 per cent in Choice Properties Real Estate Investment Trust.

The Competition Bureau revealed its investigation into the use of property controls in the grocery sector in February.

At the time, deputy commissioner Anthony Durocher told a House of Commons committee that property controls could be holding back growth for independent grocery stores and chains, and could also be a barrier for foreign players looking to enter the Canadian market.

Industry Minister François-Philippe Champagne has said he's looking for a foreign grocery to enter Canada and boost competition. 

-- With files from Darryl Greer

This report by The Canadian Press was first published June 11, 2024.

Loblaws boycott: These Canadian

 shoppers say they’re done with the

 grocery giant forever

The boycott of Loblaw-affiliated stores was started by a

 group on Reddit who wanted to pressure the chain

 during the month of May. It's still going for some

 shoppers

Elianna Lev
Tue, June 11, 2024

Loblaw chairman Galen Weston is frequently subjected to direct criticism by Canadian shoppers taking part in the boycott.


What started out as a May-long boycott of Loblaw and its affiliated stores across the country is still going strong for many Canadian shoppers who are vowing to shun the grocery giant and its chains indefinitely.

"Loblaws Is Out of Control," the Reddit group that organized and launched the initial boycott, is now encouraging Canadians who are able to take part to continue the boycott of the giant's stores, like the flagship Loblaws, Shoppers Drug Mart, Real Canadian Superstore, No Frills and Zehrs, among others.

The Reddit forum was launched in November by Emily Johnson of Milton, Ont., and now boasts nearly 90,000 members. The organizers of the boycott chose to target Loblaw and its affiliates, rather than other grocery chains like Sobeys or Metro, because of its tremendous reach. By the giant's own data, more than 90 per cent of Canadians live within 10 kilometres of at least one of Loblaw's 2,400 stores.

Yahoo Canada spoke to several people who are members of the Reddit group "Loblaws Is Out of Control" who said they are continuing their boycott past the month of May, into June, and indefinitely. Six Canadians spoke to us about why they're doing it and how they're managing to avoid the grocery and drug store empire long term.

I'm amazed at how this boycott has succeeded and brought together so many Canadians who probably otherwise disagree on many issues.

The following testimonials were shared with Yahoo Canada by Canadian shoppers across the country who are members of the "Loblaws Is Out of Control" Reddit forum. Some entries have been edited for length and clarity.

Grace Wong is a 58-year-old who lives in Edmonton, Alta., with her partner and 19-year-old son. She owns a computer repair shop. A recent post of hers on the "Loblaws Is Out of Control" subreddit garnered lots of attention when she announced she'd used up all her PC Optimum points and would be closing her account.

Suzanne is a 63-year-old who lives alone in London, Ont. She is a retired lawyer.

Melanie is a 61-year-old who lives alone in Winnipeg, Man. She is retired.

PJ is a 65-year-old who lives alone in Victoria, B.C. She is a customer service associate.

Erin is a 46-year-old who lives alone in Campbell River, B.C. She is a social worker.

Rick is a 69-year-old who lives in St. Johns, Nfld., with his wife and adult son.

Real Canadian Superstore in Edmonton.  (Photo by Artur Widak/NurPhoto via Getty Images)

Canadians shoppers learned of Loblaws boycott from Reddit

Grace: I learned about the boycott pretty much how everyone else did — on social media. I joined the subreddit, and I thought they made a lot of good points.

Suzanne: There's a widening gap between rich and poor in this country. I feel that corporations like Loblaw are deliberately and directly contributing to that. In one month, the Reddit community has done more to raise awareness and fight back than any level of government has. I refuse to set foot [in the stores of] any Weston-owned company. They have lied to Canadians and scammed us for decades.

Melanie: I joined the boycott because it was obvious to me that things had gotten out of hand. I was not aware of how crazy they'd gotten until I started learning from my fellow boycotters.

PJ: I'm amazed at how this boycott has succeeded and brought together so many Canadians who probably otherwise disagree on many issues. I've been part of boycotts in the past but never one so successful and impactful.

Erin: I remember on one of the Reddit groups, someone posted a picture of Christmas ornaments that were $80. I remember looking at that and thinking, ‘If that’s $80, how much is Christmas dinner?’ Then the whole "Loblaws Is Out of Control" started and I learned about all the things like shrinkflation, and the bread price fixing, and I was finally annoyed enough ... And it’s been really cool to watch it sort of taking off.

It was obvious to me that they'd gotten out of hand. I was not aware of how crazy they'd gotten until I started learning from my fellow boycotters.

Longueuil,Quebec,Canada-Loblaws supermarket from parking lot
The straw that broke the camel's back: Why Canadian shoppers have had enough of Loblaws

Grace: My grocery bill every month, even though it’s just three people, is absolutely horrific.

Suzanne: It makes no financial sense to pay for the privilege of shopping at a chain that treats customers as if they were criminals. I despise the self checkouts and refuse to use them for two reasons; Widespread automation obviates the need for a human employee, costing someone a job. And second, I don't work there, so why would I do this myself?

Melanie: It was actually back near the end of last year that I blew off Superstore. I did up a cart and thought ‘Geez that's rather high.' I did a matching cart at Walmart and Walmart won. I did it once more after the new year and same thing. I haven't given them anything since.

PJ: As a senior, I'm incensed at price gouging. When I started seeing people in that subreddit posting photos of prices at Loblaws I couldn't believe how badly they treat their customers. Every grocery chain dances that fine line between not losing customers, and making the biggest profit they can. But Loblaws does it with such contempt for its customers.

Erin: I just did a big grocery shop because I just moved…if I had gone to Superstore, it would have been close to $1,000, but at Walmart it was $400. I was shocked. I don’t think I’ll ever go back.

When I started seeing people in that subreddit posting photos of prices at Loblaws I couldn't believe how badly they treat their customers.

Toronto, Canada - August 26, 2021: A Costco delivery truck on the street in Toronto, Canada. Costco is an American corporation which operates a chain of membership-only big-box retail stores.

Life 'has gotten easier' since the boycott, with 'plethora' of choice

Grace: The nice thing about living in a large metro area, there’s lots of options. I shop at Sobeys, organic markets, HMart, which carries all the same stuff as T&T, and Costco.

Suzanne: I have been impacted by the boycott positively only. I have saved in excess of $400 this month alone and will continue to shop at the London food co-op. London has a few independent markets, and I go to a butcher shop run by one guy who learned the business in his country of origin, Hungary. He sells beautiful bacon. For $8.99/lb, you get actual fresh, thick cut bacon. At Loblaws and its affiliates, you'd pay $14 for a package of whisper thin fat with very little meat on it. I spend much less there for better quality food and I'm supporting a small business. For produce, I use a delivery service where a $40 box will feed two households — mine and my neighbour's — for roughly a week.

Melanie: Canadian families are just trying to eat. I'm lucky that I can afford to shop where ever I want, really. Groceries are cheaper everywhere that isn't Loblaws, Sobeys, Safeway and Save On. It's not that far out of anyone's way here — especially with cheap delivery ... My shopping habits are limited to who will deliver. I now have three deliveries every week: Giant Tiger, Dollarama and Walmart.

PJ: There's a plethora of choices here, I'm really lucky. Victoria also has a Chinatown with lots of affordable fresh produce. I can't drive due to a vision issue and I've become a ninja shopper, scouring the flyers every week, planning my food buying around loss-leader items, planning my bus trips, and calculating how much I can carry. It's very satisfying to score great deals. And if I can do that, anyone with a car can do it much more easily.

Erin: Loblaws is at least $6 for pickup, and at least $10 plus tip for delivery. At Walmart it’s free to pick up, which means now I don’t have to plan my grocery shopping. I can literally put an order in while I'm sitting at work and pick it up after work, it doesn’t cost me anything. Life has gotten easier because of this boycott.

Rick: I've been using local markets, butchers, bakers, farmers markets, Walmart and Costco. I moved my prescriptions to Costco and found big savings.

I spend much less there for better quality food and I'm supporting a small business.

Loblaws CEO Per Bank is photographed at a Suppliers Summit in Toronto, Thursday, May 16, 2024. THE CANADIAN PRESS/Chris Young

Loblaw grievances pile up for Canadian shoppers

Grace: For me, it was sort of a game to see how many [PC Optimum] points I could get. But if I’m spending thousands of dollars to get $100 in points, is that worth it? Maybe not. Now that I’ve used all the points I’m cancelling my PC Optimum membership.

Suzanne: I am going out of my way to avoid [Loblaw-affliated stores]. I'm terminally ill and have a substantial amount of expensive prescriptions - those were transferred to [a local] pharmacy that offers free delivery and substantially lower dispensing fees. I think they have lost this chunk of customers forever. There's no way to win me back. I also cancelled my PC credit card. [They employ] practices that are emblematic of the arrogance and contempt with which they view their own customers ... like selling underweight and expired food, to cutting the discount on expiring food from 50 per cent off to 30 per cent off.

Melanie: I got a lovely steak yesterday that I wouldn't dare get from Superstore. The attitude of [Loblaw Chair Galen] Weston and [CEO Per] Bank are over the top and they are so dismissive and condescending.

PJ: People have realized that Loblaws stores charge on average 25 to 30 per cent higher prices for the same items ... assuming that [customers] will just suck it up and pay too much.

Erin: I remember when Superstore first came to where I lived, they were the cheapest. You could save money shopping there. I don’t know when it changed, but it changed.

Rick: It's simple economics ... You can get one deodorant for $9.99 at Shoppers Drug Mart, or five of the same at Costco for $14.99!

I think they have lost this chunk of customers forever. There's no way to win me back. I also cancelled my PC credit card.

These Canadians say they will boycott Loblaw forever

Suzanne: I will keep boycotting them forever. I have a responsibility to do my bit for my son's generation and those that follow to at least give them a fighting chance to have a comfortable life.

Melanie: When I think of all the money that Loblaws has literally stolen from Canadian families on food of all things it makes me sick. Like many, I won't give them my money ever again.

PJ: I’m choosing to keep boycotting for purely selfish reasons: More money in my bank account at the end of the month. I don't see this as anything but a permanent boycott. Once you've altered your routine and learned a new store layout, once you've brought home produce that costs 30 per cent less and it lasts a week in the fridge, why would anyone go back? Only a masochist would.

Erin: Canadians can really make change. The boycott is working. The more people that join, the faster and more efficient it will work.

Grace: I’m boycotting permanently because I’m getting sick and tired of paying so much for what seems like not an awful lot, and finding out after the fact that you go shop elsewhere and you can get it for a hell of a lot cheaper than Loblaws.

Rick: I'm not going back because I'm saving too much money and meeting local businesses.

When I think of all the money that Loblaws has literally stolen from Canadian families on food of all things it makes me sick.

 

Telehouse launches three Toronto data centres to facilitate internet traffic flow

Sammy Hudes, The Canadian Press

Data centre service provider Telehouse is expanding to Canada with the launch of three locations in downtown Toronto that will act as central meeting points for internet traffic flow.

The company acquired the three sites, located at 151 Front St. W., 250 Front St. W. and 905 King St. W., last year for $1.35 billion.

The data centres will allow hundreds of internet carriers and service providers, cloud providers and content providers to connect by establishing a handoff location within Telehouse's buildings, the company said Monday.

Andy Fenton, director of sales and marketing for Telehouse Canada, said it chose to operate in downtown buildings to make it more efficient and cost-effective for companies relying on high-speed connections to link up with a provider's network.

"If you're a startup gaming company that resides in the [Greater Toronto Area], you have options of where you want to put your compute resources. If you locate them in the north part of the city, it's unlikely that you'd be able to establish the connectivity required to the rest of the planet," Fenton said during a virtual press conference on Monday.

"You would have to somehow make arrangements to meet those carriers in the building that you chose in the northern part of the city."

Telehouse Canada said its data centres are carrier-neutral and provide more than 30 megawatts of IT load. More than half of all Canadian carriers, service providers and content providers already have a presence at Telehouse Canada's data centres.

"We don't pick favourites," said Fenton.

"We operate completely independent of all the carriers. We establish the framework and the rules around how they interconnect within our building and we facilitate those interconnections."

The company said the expansion to Canada is based on growing demand for connectivity services in the country as it transitions to 5G, along with the spread of [Internet of Things] technology.

It also noted the federal government's plan to extend high-speed internet access to 98 per cent of Canadians by 2026 and the entire population by 2030.

"As more devices come online and data volumes continue to explode, that connectivity data centre services that we are providing will be more essential," said Telehouse Canada president and CEO Satoshi Adachi.

He said the company hopes to expand to more locations in downtown Toronto once its current data centres reach capacity. Adachi added the company would consider establishing locations in other major Canadian cities such as Montreal, Vancouver and Calgary if there is demand from local carriers.

Telehouse operates 45 interconnected data centres in more than 10 countries, with 3,000 global customers.

This report by The Canadian Press was first published June 10, 2024.

PIE IN THE SKY

Generative AI could add $187 billion to Canada's economy by 2030: Microsoft

Daniel Johnson , BNN Bloomberg

Generative AI is poised to add around eight per cent to Canada’s labour productivity by the end of the decade, according to Microsoft Canada President Chris Barry. 

Last week a report from Microsoft, conducted by Accenture, found that generative AI could add $187 billion to the Canadian economy by 2030. The report said the projection is based on AI generating up to $180 billion in annual productivity gains by 2030 and another $7 billion coming from new AI products and services. 

“You think about…a range of industries, job types, job functions and essentially what the study finds is about 30 per cent of those can, with AI, be either augmented in some way or automated fully,” Barry said in an interview with BNN Bloomberg last week. 

“And assuming a 40 per cent adoption rate of the AI against those things, we do see by the end of the decade that $187 billion economic impact to the economy of Canada, which is super accretive to labour productivity.”

He added that the “bump” in labour productivity by the end of the decade would reach around eight per cent. 

Innovation in Canada 

Earlier this month Boston Consulting Group released a study that found that 57 per cent of Canadian executives indicated they were prioritizing innovation, which was found to be lower than the global average of 83 per cent.

Around 48 per cent attributed the slower pace of innovation to Canada’s risk-averse culture. 

Additionally, 81 per cent of Canadian executives indicated they were experimenting with generative AI for innovation, research and development, or product development. However, only 10 per cent indicated they were applying the technology at scale. 

AI replacement? 

On the changing landscape and fears that AI will replace employees, Barry predicts AI will be largely used to augment workers in the Canadian economy. 

“So people will be more effective, parts of jobs that are more menial or more task-oriented or more basic in a sense, those can become augmented or automated so that workers can focus on higher-order work that has more benefit to their organizations and frankly to their own satisfaction as employees,” he said. 

However, Barry noted that some elements of work may change or be eliminated. 

 

U.S.'s neighbours brace for Trump second term after trauma of first

Brian Platt and Eric Martin, Bloomberg News

Late last year, U.S. President Joe Biden’s administration was facing a border problem – and it wasn’t just on America’s frontier with Mexico.

Thousands of Mexican citizens were taking advantage of visa-free travel to fly to Canada and then try to cross into the U.S. by heading south.

Canadian Prime Minister Justin Trudeau came under pressure from American officials and local politicians to reinstate the visa requirements he ended in 2016. Critics wanted immediate action, but Trudeau’s government moved delicately, taking time to meet with Mexican President Andrés Manuel López Obrador’s administration and in February ultimately reimposing the demand for only about 40 per cent of arrivals.

The careful maneuvering was more than just standard diplomacy. Senior officials in Trudeau’s government worried it would be terrible timing to start a fight with Mexico, according to people familiar with the matter. Within a year, their thinking went, Donald Trump could win another term in the White House, potentially reigniting a continent-wide battle over tariffs and trade. Canada and Mexico would need to present a united front.

In this case, Trudeau appears to have navigated the issue successfully, cutting down on arrivals without tanking relations with Mexico. But the far bigger challenge may still be to come.

As Americans head to the polls in November, concern is building in Ottawa and Mexico City that the next U.S. administration may move to limit trade among the three countries that totaled some US$1.5 trillion in goods last year. The United States-Mexico-Canada Agreement — the deal reached in 2018 to replace 1994’s North American Free Trade Agreement — is scheduled for a joint review in 2026, and there is growing speculation the U.S. will push to renegotiate parts of it, especially rules for auto manufacturing and dairy. 

Trudeau has launched a strategy geared toward recruiting U.S. allies. He has sent senior Canadian politicians, diplomats and business leaders to meet with U.S. chief executives, lawmakers and governors on the importance of trade, particularly for the automobile and energy industries.

Chinese investment in Mexico looms heavily over its relationship with the U.S., and since December, Mexico has been working on a framework for investment screening around national security to help alleviate American concerns. A particular concern is Chinese companies exporting cars from Mexico into the U.S. The two sides have met several times on the issues, according to a person familiar with the matter.

In both countries, the angst goes beyond Trump — it’s under Biden that the U.S. has been clashing with Canada and Mexico on auto-parts rules. Just last month, Biden unveiled tariffs on about $18 billion of annual imports from China targeting electric vehicles, batteries, chips, solar cells, and critical minerals. That’s in addition to previous increases on steel and aluminum. 

But Canadian and Mexican officials say trade negotiations would be vastly more volatile and unpredictable if Trump were at the helm.

Trump has vowed to impose 10 per cent duties on goods from around the world if he wins in November, part of efforts to shore up U.S. manufacturing jobs. He hasn’t explicitly said how that would apply to Canada and Mexico, but Canada’s ambassador to the U.S. has warned about global retaliation.

“A second Trump term is going to be quite different” when it comes to trade, said Laura Dawson, executive director of the Future Borders Coalition, a binational group that promotes Canada-U.S. trade. She said the “adult supervision” around Trump in his first term — people who were largely supportive of trade — are “few and far between now.”

In an attempt to line up allies on trade, Canadian officials such as Industry Minister Francois-Philippe Champagne travel frequently to the U.S. Those meetings have included chief executives at companies such as Coca-Cola Co., United Parcel Service Inc. and Goodyear Tire & Rubber Co., as well as Washington lawmakers.

In these visits, the Canadians emphasize their country is the top export destination for 35 states. They often travel beyond the Canada border regions to places such as Georgia, South Carolina and Nebraska to emphasize how crucial Canadian trade is to those states’ economies. After all, Canada buys about as much in goods from the U.S. as China, France and Japan combined.

“When I look at people I say, ‘I hope you’re happy to see me because I’m your largest customer by far,’” Champagne said in an interview during a recent trip to New York.

Though Champagne stressed that he meets with a range of people, some are clearly Trump-related figures. That includes Gary Cohn, vice chairman at IBM Corp. and Trump’s former top economic adviser, as well as Republican state governors such as South Carolina’s Henry McMaster.

Canada’s U.S. Ambassador Kirsten Hillman said officials have stayed in contact with people in Trump’s orbit over the past few years, targeting think tanks they believe would be influential if he wins a second term.

“We meet with them often,” Hillman said at an event with the Montreal Council on Foreign Relations. “Not just the management, but also the people who are writing the policies. My team and I, through the embassy, are in continual contact.”

In Mexico, officials working on behalf of President-elect Claudia Sheinbaum, an ally of López Obrador who has pledged continuity with his policies, are creating separate but similar plans for trade negotiations with Trump or Biden, according to a senior adviser. The country’s top exports include automobiles, chemicals and agriculture products, and the U.S. and Mexico have clashed over rules for energy companies, as well as American corn exports.

Behind closed doors, Mexico’s biggest companies express concern that Trump would link the issues of trade and immigration, as he did in May 2019 — when he threated tariffs if Mexico didn’t reduce the number of migrant arrivals at the U.S. border — and as Biden has worked deliberately not to do, according to a Mexican official, who asked not to be identified to be able to speak about private conversations. 

The U.S. border saw record arrivals of undocumented people in the 2023 fiscal year, and although that has slowed in the past few months, there’s concern that trend could quickly reverse. This month, Biden announced new measures to block migrants from making asylum claims as part of efforts to limit crossings and fight the perception that the border is out of control.

Mexican officials also worry that Trump wants to use military force to attack the nation’s cartels, regardless of Mexico’s historical resistance to foreign troops operating on its soil, and that such actions could create more trade tensions.

There’s talk in Mexico about bringing back Marcelo Ebrard as a cabinet member. He flew to Washington in June 2019 to broker a deal with Trump to deploy Mexico’s national guard to stop migrants in exchange for Trump withdrawing his threat of tariffs on Mexican exports. Ebrard met personally with Trump several times in the first years of López Obrador’s administration.

Juan Ramon de la Fuente, who served as López Obrador’s ambassador to the United Nations and thus worked with the U.S. State Department during the Trump years, is leading Sheinbaum’s transition. Like Ebrard, he could take a key post in her government.

At a recent event in Washington, Kenneth Smith Ramos, who was Mexico’s chief trade negotiator during the USMCA talks, spoke about concerns that reopening the agreement for review could result in new restrictions.

“Opening the USMCA is very dangerous given the political pressures, protectionist pressures that exist in all three countries and throughout the world,” he said, speaking on a panel organized by the Center for Strategic and International Studies.

 

More groundwork needed to maintain Canada-U.S. relations, summit hears

Ian Bickis, The Canadian Press

More needs to be done to maintain North American relations in an increasingly competitive and volatile world, and as a U.S. election approaches, attendees at a conference in Toronto heard on Tuesday.

Canada needs to lay more solid groundwork today to avoid being surprised again on trade agreement talks, said Darryl White, chief executive of BMO, which co-hosted the US-Canada Summit with Eurasia Group. 

"It's fair to say that business communities and the public were caught pretty much off guard when NAFTA was revisited," said White.

"We need to be more ready this time."

He said Canadians don't understand the level of opposition there was in the U.S. to the agreement, and that it's crucial to widen support for the trade relation.

"Private- and public-sector leaders must ensure that Main Street benefits of deeper partnerships in an increasingly complex world are well understood."

The importance of maintaining full access to the U.S. market is being emphasized by how much stronger it's currently performing.

Frances Donald, chief economist at Manulife Investment Management, noted how much the U.S. economy is diverging from Canada's to the point that it's "problematic." 

Retail sales in the U.S. are still growing while they're falling in Canada despite the ballooning population, GDP per capita growth has fallen for the last seven quarters in Canada, and productivity continues to lag the U.S. to the point where it's 40 years behind. 

"The U.S. and Canadian economies are diverging, and they're diverging pretty substantially,” Donald said.

But U.S. Ambassador to Canada David Cohen went some way to assure attendees that there's no seismic shift approaching as the North American trade agreement comes up for renewal in 2026.

"It's not a renegotiation," said Cohen. 

"It's a review ... there is no interest in the United States in renegotiating."

There is concern those expectations could shift notably if Donald Trump is elected, but Cohen said there are institutional forces that don't change with a single election that should help maintain some stability.

Trade agreements also have to be adapted to make sure they're doing enough for workers, said Elizabeth Baltzan, a senior advisor to the U.S. Trade Representative.

She said that the globalization trend of simply removing trade barriers has shown its limitations, and there's more need to factor in geopolitical and market concentration risks, as seen with China's manufacturing dominance.

"As we look at how trade policy is changing, we owe it to democracies, to our people, to make sure that the policies are responsive to our lived experiences."

It's important for Canada, the U.S. and Mexico to figure out together how to respond to non-market policies and non-democratic countries, she said. 

"We didn't really take those risks fully into account, so now we've got to have a trade policy that is responsive to those challenges."

But as Canada looks ahead to potential trade talks, limited defence spending could be an issue, especially if Trump is elected, said several panellists. 

Foreign Affairs Minister Mélanie Joly looked to assure those gathered that Canada has heard criticism and plans to ramp up spending.

"Canadians are now understanding that the world has changed and we need to invest more in defence."

In April, the federal government announced plans that would get spending toward 1.76 per cent of GDP by the end of the decade, though that's still short of the two per cent NATO commitment.

While the ongoing shortfall is a source of tension with some U.S. politicians, Joly said Canada is aiming to ramp up spending further.

"I'm convinced that we can be on a path to two per cent," she said. 

The importance of defence spending comes as the world faces conflicts on several fronts, said Ian Bremmer, president and founder of Eurasia Group.

"We are in a materially more dangerous place than we were a year ago."

Bremmer said he thought it was a little more likely that Trump would be elected, but it's still quite unclear. He said the foreign policy implications of a Trump presidency might be less than expected, as his cabinet could well be stocked with experienced people, but it could lead to more authoritarianism in the U.S. that could affect Canadian systems. 

He said Robert Lighthizer, Trump's chosen trade negotiator last round, won't be easy to deal with, but it will be possible for Canada to work with him. 

"He will be dealt with professionally by Canadians, and I think that will work."

He said that given all the uncertainty in the world, it's all the more important to maintain relations between Canada and the U.S.

"This relationship is no longer just nice to have, it's increasingly strategically essential."

This report by The Canadian Press was first published June 11, 2024.

CANADA

Younger homeowners more likely to be financially stressed: survey

The Canadian Press

Roughly six in 10 Canadians with a mortgage are financially stressed, with younger homeowners more likely to be under pressure. 

In a new Leger survey, 68 per cent of respondents between 18 and 34 years of age with a mortgage say they are very or somewhat financially stressed about their mortgages, compared with 62 per cent across all homeowners.

Last week, the Bank of Canada cut its key interest rate, offering some relief to borrowers after the central bank's fight against inflation saw its key lending rate rise to a peak of five per cent.

Four out of 10 Canadians surveyed by Leger said they think the Bank of Canada should be cautious as it lowers interest rates, but another third think it’s not going fast enough. 

Respondents in households making more than $100,000 a year were more likely to say they support the central bank’s caution. 

Though the steep rise in interest rates has brought inflation within reach of the Bank of Canada’s two per cent target, it has put pressure on Canadian households and weighed on the economy.

Among the survey respondents with mortgages, 77 per cent have a fixed rate. 

Of those with fixed-rate mortgages, 43 per cent say their mortgage is up for renewal this year or next year. 

Two thirds of respondents whose mortgages are up for renewal in the next two years say they plan to go for a fixed-rate mortgage. Younger respondents were more likely to say they will opt for a variable rate. 

Leger surveyed 1,528 Canadians between June 7 and June 9. Online surveys cannot be assigned a margin of error because they do not randomly sample the population.

This report by The Canadian Press was first published June 11, 2024.

Wall street ties to Amazon depletion mapped out in report

Frances Schwartzkopff and Saijel Kishan, Bloomberg News

A deforested area in the Amazon rainforest. Photographer: Michael Dantas/AFP/Getty Images , Photographer: Michael Dantas/AFP/Getty Images

(Bloomberg) -- Some of Wall Street’s biggest banks aren’t properly accounting for the risks of doing business with oil and gas companies operating in the Amazon rainforest, according to a study by conservationists. 

The report, published by Stand.earth Research Group, identifies six banks it says are responsible for almost half of all direct financing for oil and gas operations in Amazonia over the past 20 years.

JPMorgan Chase & Co., Citigroup Inc., Itau Unibanco Holding SA, Banco Santander SA and Bank of America Corp. have failed to “fully address the adverse impacts of their financing,” the researchers said. The sixth bank — HSBC Holdings Plc — was singled out for having improved its policies. 

“Most of these banks claim to uphold human rights and environmental protection, but, with the exception of HSBC, they continue to finance the operations of state-owned and private oil and gas companies in Brazil, Peru, Colombia and Ecuador,” the report’s authors wrote. 

A spokesperson for JPMorgan said the bank supports human rights and screens for “sensitive business activities.” Spokespeople for Citigroup and Bank of America referred to their latest risk-management policies, which spell out due diligence requirements and explain expectations that clients are to meet.

Itau Unibanco said by email that it’s “working to tackle deforestation.” A spokesperson for Santander said the bank understands “fully the importance of protecting the Amazon,” and is working with clients.

A spokesperson for HSBC, which ceased financing oil and gas projects in Amazonia in 2022, said the bank’s “approach is to focus on real-world emission reductions as we support our clients in delivering the energy transition.” 

Banks have taken to formulating their environmental and social risk policies in narrow terms to reduce meaningful impact assessments, according to Stand.earth and the Coordinating Body of Indigenous Organizations of the Amazon River Basin, an umbrella group representing more than 500 Indigenous peoples. 

In some cases, the physical area for which screening is required makes up less than a fifth of Amazonia, the report’s authors estimate. Some transactions are structured in a way that makes them harder to track, the report’s authors also said. Many deals are syndicated and the level of due diligence is often reduced. Combined, the effect is to exclude almost three quarters of Amazonia from rigorous risk management, they said.

“There’s a real lack of transparency in the data,” Angeline Robertson, the report’s author and a Stand.earth researcher, said in an interview. She and her colleagues are calling on governments in the region to enact stricter regulations.

The warning comes as global temperatures blast through previous records, pushing the nine-country region that makes up Amazonia closer to environmental collapse. Degradation of the Amazon soared in the first four months of this year due to increasing fires and a lack of preventative monitoring, Brazilian environmental officials said last month.

The organizations are calling for banks to support the global agreement that targets protecting 80 per cent of the Amazon. The organizations also said the banks should immediately stop new oil and gas project financing and phase out existing agreements by the end of next year. What’s more, they want banks to halt financing for oil and gas traders.

“We are literally living in a rainforest on fire, our rivers are either polluted or drying up,” Fany Kuiru, general coordinator of COICA, said in a statement. Global banks “must be held accountable.”

Tesla robotaxi revenue is likely years away, JPMorgan warns

Craig Trudell, Bloomberg News

A 2024 Tesla Model 3 during the Montreal Electric Vehicle Show in Montreal, Quebec, Canada, on Friday, April 19, 2024. Prime Minister Justin Trudeau is offering more tax breaks to automotive firms to put their electric vehicle factories in Canada, as companies including Honda Motor Co. and Toyota Motor Corp. consider lucrative new investments. Photographer: Graham Hughes/Bloomberg , Bloomberg

(Bloomberg) -- Tesla Inc. investors expecting the carmaker to build a business around robotaxis in short order are likely to be disappointed, JPMorgan Chase & Co. analysts wrote in a report.

“We expect Tesla to show a robotaxi concept on Aug. 8 and perhaps an accompanying app, and to reveal more about its expected business model,” JPMorgan’s Ryan Brinkman said in the note to clients Tuesday. “But we do not expect material revenue generation likely for years to come.”

This expectation is based in part on the analyst’s recent meeting with Tesla’s director of investor relations, Brinkman wrote. The IR executive suggested that Tesla will build robotaxis off the next-generation vehicle platform that won’t launch until the company is much closer to fully utilizing its existing production capacity, which may take several years.

Chief Executive Officer Elon Musk has reoriented Tesla around robotaxis after months of steep price cuts failed to buoy sales of its electric vehicles. While the CEO has teased the concept of a shared fleet of autonomous cars for at least eight years, the company has yet to stand up much of the infrastructure it would need for such a service, nor has it secured regulatory approval to test driverless vehicles on public roads.

Tesla’s next wave of growth will be led by the introduction of lower-cost models that are expected to roll out in force by 2025, the company’s IR team told Brinkman. These vehicles will utilize existing platforms and assembly lines instead of the next-generation platform that may not be ready to launch until around 2027.

Brinkman has the equivalent of a sell rating on Tesla’s stock with a US$115 price target. The shares fell as much as 3.5 per cent as of 11:20 a.m. Tuesday in New York and have slumped 32 per cent this year