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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: Canadian economy
July 31, 2012 at 10:00 AM

A serious (non-arena) problem for the port

Shippers pay $1.25 for every $1,000 worth of cargo that goes through American ports. This is the Harbor Maintenance Tax. Canada and Mexico don’t charge a similar tax and a new report shows that the levy does put U.S. ports at a competitive disadvantage. “Pacific Northwest ports are facing an invisible blockade that is sending our business to Canada,” U.S. Rep. Rick Larsen, D.-Wash., said in a prepared statement last week. Larsen is the ranking Democrat on the Coast Guard and Maritime Transportation Subcommittee, which has jurisdiction on the issue in the House.

The Federal Maritime Commission study found that Canada and Mexico are not breaking any trade laws. It also stated that “many of the advertised benefits of foreign ports are not as significant as may be believed, for example, the transit time from China to inland destinations such as Chicago and Memphis through the Port of Prince Rupert as opposed to ports in the United States.”

American ports are found to be competitive internationally. “However, it would appear that the (Harbor Maintenance Tax) makes the challenge more difficult. This is especially the sentiment of the ports that are competitive with Canadian and Mexican ports.” It quotes Tay Yoshitani, CEO of the Port of Seattle: “A lot of factors go into the routing of cargo and a lot of carriers/shippers want diversity in how they get cargo to warehouses…cost is always an issue, and the HMT clearly disadvantages us against Canadian ports.”

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Comments | More in Canadian economy, Infrastructure, Mexico, Ports of Seattle and Tacoma, Railroads, Trade

January 19, 2012 at 10:15 AM

After Keystone, energy policy still lacking

Neither the drill-baby-drill lobby nor environmentalists should be taken in by the “Obama rejects Keystone XL pipeline” crawler headlines. The pipeline has been postponed, in no small measure because of the stubbornness of the company and the fossil fuels lobby in refusing to consider an alternative route that would steer clear of the most sensitive environment. I have no doubt the pipeline, bringing tar-sand oil from Alberta to the Gulf Coast of the United States, will be approved and built with minor adjustments.

In reality, the tar sands, along with whatever oil can be extracted from the Bakken formation in North Dakota, produce extremely “heavy” petroleum, aside from its horrific environmental consequences. As a result, it is much more costly to refine (and extract) than the light-sweet crude that built the modern automotive/industrial age. In addition, getting at these oil deposits requires an enormous amount of fossil fuel “inputs.” So Alberta is not the next Saudi Arabia.

As for the pipeline itself, the routing takes it to the petrochemical complex that mostly lines the Houston Ship Channel and nearby locations. This is for refining and shipping to the highest bidder. If that happens to be Americans, fine. If Chinese, well, that’s capitalism. So the tar-sand and Bakken oil will not necessarily add to “energy independence.”

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Comments | More in Canadian economy, Energy

November 14, 2011 at 9:40 AM

The pipeline, Canada and the energy future

The United States’ decision to delay the Keystone Pipeline, which would have brought Canadian oil to U.S. refineries, is making us few friends in the north. The Globe and Mail reported on how Canada’s energy industry is now in an urgent hunt to get its product to Asia. And Prime Minister Stephen Harper says the delay shows why Canada needs to diversity its trade beyond the U.S.

President Obama and Harper met privately during the weekend’s APEC summit in Hawaii:

Strains in the Canada-U.S. relationship and efforts to mend fences were at the top of the agenda as Mr. Harper and Mr. Obama met. They talked about a pending Canada-U.S. trade and security pact as well as the consequences of the State Department’s decision to put off until 2013 approval of the $7-billion Keystone KL pipeline that would carry oil sands crude to refineries in Texas.

Mr. Harper played down that and other setbacks, saying politics is temporarily clouding what’s best for the two economies. “This is simply the political season in the United States, and decisions are being made for domestic political reasons,” he told reporters.

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Comments | More in Canadian economy, Energy, Environment

September 1, 2011 at 9:55 AM

Don’t expect the Fed cavalry to ride to the rescue, yet

August rumbles away, leaving more uncertainty than happy vacation memories. Federal Reserve Chairman Ben Bernanke pretty much admitted in his Jackson Hole speech that the central bank is powerless to create jobs and stimulate growth without help on the fiscal side from the White House and Congress. That won’t happen. President Obama is timid. As for Congress, as Daniel Weeks, president of Americans for Campaign Reform put it, “Congress isn’t broken — its fixed by special interests.”

There will likely be no QE3 unless deflation appears as a serious threat (what we really need is a little inflation to help with debt deleveraging). The Federal Open Market Committee is divided over the path forward. The Fed faces unprecedented threats to its independence, not least from Rick Perry, potentially the next president, who implied that further easing would be treasonous.

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Comments | More in Canadian economy, Deflation, Eurozone, Federal Reserve

November 29, 2010 at 9:55 AM

After riding out the recession, Canada faces a weaker economy

Set aside your Irish worry beads for a moment. What about Canada? Washington state’s No. 2 trading partner ($6.8 billion in exports last year), weathered the Great Recession with Canadian restraint. But now some troubling trends are emerging. “After delivering a solid ‘V’ shaped recovery in the early stages of economic recovery, Canadian economic growth has moderated significantly over the last six months,” Toronto-Dominion Bank economist Diana Petramala told the Globe and Mail.

Statistics Canada, the government agency, released a report today showing weakening trade, with the trade deficit hitting a much higher than expected level. Tuesday’s GDP report is expected to show third-quarter growth of only 1.5 percent.

Moody’s Analytics expects a slowing Canadian economy in 2011. The big problems are a strong currency, undermining export competitiveness, and weak global demand (especially from the tepid American “recovery”). David Rosenberg, chief economist of the investment firm Gluskin-Sheff, also continues to worry about a housing downturn, especially if the Bank of Canada raises rates.

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Comments | More in Canadian economy

October 13, 2010 at 9:32 AM

The dragon in the living room: China increasingly dominates the economy

News you might have missed:

— A team of seasoned Silicon Valley entrepreneurs attracted billions of dollars in a bid to dramatically lower the costs of solar panels. Their hope, according to the New York Times, was that the venture would “make them the Intels and Apples of the global solar industry.” Instead, that honor is going to the Chinese.

Chinese manufacturers, heavily subsidized by their own government and relying on vast economies of scale, have helped send the price of conventional solar panels plunging and grabbed market share far more quickly than anyone anticipated. As a result, the California companies, once so confident that they could outmaneuver the competition, are scrambling to retool their strategies and find niches in which they can thrive.

— As BHP Billiton makes a hostile bid for Potash Corp., it’s expected that a group of state-owned Chinese companies and financiers will emerge with a rival offer. Potash is the largest maker of fertilizer in the world. As the NYT’s Andrew Ross Sorkin observes, “45 percent of Potash’s production is sold to farmers in North America. The big worry, in part, is that the Chinese could seek to redirect that supply to China, starving other countries of a much-needed commodity.”

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Comments | More in Canadian economy, China economy and business, Income/living standards, International economy, Jobs/Unemployment

July 23, 2010 at 10:43 AM

Oh, Canada: A look behind the reasons for your recovery

Oh, Canada. We have much to learn from your economy. Or so goes a spate of recent reporting on how the Canadian economy weathered the Great Recession far better than its southern neighbor.

The nation avoided the subprime disaster. Unemployment has fallen below 8 percent. A stronger recovery is helping shrink the federal deficit. On the eve of the G 20 summit in Toronto, the Associated Press wrote, “Canada thinks it can teach the world a thing or two about dodging financial meltdowns.”

Well, yes and no. The chief lessons are ones that American policy makers won’t apply. For example, Canada’s banking system is more effectively regulated and lacks the risky too big to fail Financial Doomsday Machine that triggered the great recession. Corporations in general have less political control in Canada. It has less government debt — lacking the expense of big tax cuts for the rich or the $1 trillion (so far) “war on terror” — and is generally less leveraged. Canada has publicly funded health care, making it more competitive and enhancing its human capital advantage.

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Comments | More in Banking, Canadian economy

June 5, 2009 at 8:55 AM

The sharp job losses ease, but new hiring may take time

Top of the News: At the risk of being accused of cheerleading again, today’s report on job losses is unabashedly good news for the general economy.

“Only” losing 345,000 jobs in May would be a recessionary stomach-punch in a normal downturn. But the scary plunge in the economy that began late last year was anything but normal. So as pained as the labor market remains, this moderation in the rate of job losses shows the strong policy steps adopted are having an effect. Is the worst over? Maybe, barring another shock.

Every downturn is different. But recent recessions have seen hiring lag even further behind the turnaround than was once considered normal. Blame it on globalization, a changing valuation of skills and, some would argue, policies such as deregulation. And what could possibly go wrong. Well, higher oil prices, for one.

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Comments | More in Canadian economy, Jobs/Unemployment