South Korea trade deal could save you money — someday

CBC News Posted: Mar 12, 2014 5:00 AM ET Last Updated: Mar 12, 2014 6:57 AM ET

The Canada-South Korea free trade agreement, which is expected to remove nearly all tariffs between the two countries, has been well received by various sectors of the Canadian economy — with the exception of the automotive industry, which has raised concerns about the potential for tens of thousands of manufacturing jobs lost.

The government insists the effects of removing Canadian tariffs on South Korean cars would be "negligible," citing a 2012 study conducted for the Department of Foreign Affairs that shows the potential for job losses in the hundreds — not tens of thousands.

Canadian exporters of agricultural products such as beef, pork, canola and grains will be among the winners in the free trade deal with South Korea, but the benefits to Canadian consumers may not be as striking.

However, International Trade Minister Ed Fast told CBC News Network's Power & Politics on Tuesday that the elimination of tariffs would be good for Canadian consumers.

"We're going to see better value for the consumer, there will be greater choice for our consumers. If you ask consumers on the street, 'Would you like to pay a little bit less for your TVs that you buy?' they would say absolutely yes."

Here are some of the products imported from South Korea that Canadian consumers could expect to pay less for:

Vehicles: Canada will drop its 6.1 per cent tariff on imports of South Korean vehicles over a three-year period, with the first cut coming once the agreement is in force. Two years after the agreement is in effect, tariffs will be completely eliminated, which means Canadians can expect prices to come down on South Korean-made makes such as Kia and Hyundai.Appliances: Canada will eliminate tariffs that currently run up to eight per cent on major appliances within three to five years. That means Canadians can expect to pay less for refrigerators, stoves, washers and dryers made by LG and other South Korean brands.Electronics: Duties run up to 14 per cent on consumer electronics imported from South Korea. Under the new free trade agreement, Canada will drop its tariffs over three to five years, and Canadians can expect to see prices come down on digital cameras, video camcorders and TVs made by Samsung and others in South Korea.Apparel and footwear: Canadians can expect to pay less for clothes and shoes made in South Korea once duties that currently run up to 20 per cent are removed over a period of three to 11 years.

While cars and major appliances figure on the list of top 25 products Canada imports from South Korea, consumer electronics, clothes and shoes do not, because Canada does not import them in significant amounts.

When it comes to paying less for imported goods, consumers in South Korea may come out a little further ahead than Canadian consumers. Under the new trade deal, South Korean shoppers could pay less on a greater array of food products.

Here are some of the products exported from Canada that South Korean consumers could expect to pay less for:

Vehicles: As soon as the agreement comes into force, South Korea will drop all existing tariffs on imports of Canadian vehicles. Current duties run up to eight per cent.Fish and seafoodLeather clothingBeef, pork, canola and grainsFrozen french fries Maple sugarRye whiskyIce wineChickpeas and lentils

The prospect of South Korea dropping its tariffs, which run up to 27 per cent, on chickpeas, primarily grown in Saskatchewan, did not go unnoticed by Premier Brad Wall, who thought it important enough to highlight in a post on Twitter.

Consumers will not feel the savings for some time to come, as there will have to be a legal review of the final trade agreement followed by translation into Korean, English, and French before it is tabled in Parliament and then ratified by both governments.

While it is not known how long that could take, the Canadian government hopes to have the agreement come into force "as soon as possible."

Canada - Korea free trade agreement Canada - Korea Free Trade Agreement 2 Back to the future with Brian Mulroney and Jean-François Lisée Mar. 11, 2014 3:50 PM This week on The House, former Prime Minister Brian Mulroney compares the crisis in Ukraine to what he dealt with at the height of the cold war. Then, PQ cabinet minister Jean-François Lisée talks about when another referendum in Quebec might be held. Minister of State for Democratic Reform Pierre Poilievre defends the Fair Elections Act. And In House panellists Terry Milewski and Emmanuelle Latraverse weigh in on the week that was in Canadian politics.


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Stephen Harper touts South Korea deal 'wins' on B.C. visit

Prime Minister Stephen Harper was in B.C. today, where he touted the benefits of the Canada-Korea free trade deal not only for the provinces, but particularly for B.C.

The free trade agreement is expected to eliminate nearly all tariffs between the two countries, giving Canadian businesses increased access to South Korea and a window into other Asia-Pacific markets.

"There is no province that is going to benefit from this deal with Korea more than British Columbia," Harper told a B.C. Chamber of Commerce gathering in Vancouver, where he stopped on his way back from South Korea.

"B.C. business has tremendous gains and obviously B.C. business is more aware of the export opportunities that exist in Korea and through Korea to other Asian markets," Harper said.

Harper was in B.C. taking part in a moderated question and answer session with John Winter, the president and CEO of the B.C. Chamber of Commerce.

The free trade agreement would also see South Korea drop its three per cent tariffs on liquefied natural gas, giving Canadian exporters duty free access for their products.

While Canada does not currently export LNG to South Korea, the agreement would help Premier Christy Clark's push to broaden those markets into the wider Asia-Pacific region.

Winter called the elimination of those tariffs "a good step going forward."

The trade deal has been well received by most sectors of the Canadian economy with the exception of those in the automotive industry, who worry the deal will cost Ontario tens of thousands of manufacturing jobs.

Harper defended the free trade agreement against those claims saying, "We know there is some division of opinion in the auto sector, but there are parts of the auto sector that are very supportive?," the prime minister said pointing to Honda and Toyota.

The Japanese firms, both of which manufacture cars in Canada, have come to welcome the deal in the hope that Canada will eventually sign a similar one with their home country.

While Ford has not been supportive of the agreement, Harper said South Korean cars are already being imported duty-free through the U.S. and its free trade deal with South Korea.

"We're in an era where we are not going to win by trying to protect sectors. We have got to get out there, we've got to compete with the best and we've got to win," Harper said.

On the whole, Harper said that having South Korea drop tariffs, which run up to three times higher than Canada's, represents "some very, very big potential wins in terms of making Canadian goods much more competitive?."

The federal government insists the concerns expressed by Ontario's auto sector are overblown, saying the effects of removing Canadian tariffs on South Korean cars would be "negligible," citing a 2012 study conducted for the Department of Foreign Affairs that shows the potential for job losses in the hundreds — not tens of thousands.

Harper used the public event to join other G7 leaders in calling on Russia to back away from a referendum in Ukraine's Crimea region.

"All of the G7 countries remain collectively strongly committed to the view that we will not accept Russia's illegal occupation of Crimea," Harper said.

When Harper was in Vancouver for a similar event in January, two climate change activists managed to sneak up behind him and onto the stage where he was sitting.

"I'm glad we got through this alone on the stage," Winter said, drawing laughs and applause from the business audience.

"I think B.C.'s reputation has been tattered," the moderator joked as he wrapped up the question-and-answer session.

"I was going to say, it doesn't really feel like B.C.," Harper said laughing along.


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Hiring climate said to be 'modest' in coming quarter

Canadian employers expect to hire cautiously in the next three months, with job seekers more likely to have success in Western Canada than in Ontario and Quebec, according to a new survey of hiring intentions.

The latest quarterly employment outlook survey from Manpower finds that employers are forecasting only a "modest" hiring climate in the April-to-June period, with new business growth at its weakest level in five months.

Manpower's survey of more than 1,900 employers across Canada found that 16 per cent were planning to increase staffing levels, while four per cent were planning to cut them back.  

The healthiest hiring climate is in the Western provinces, with the rosiest opportunities in the construction, transportation and public utilities sectors.

"However, job growth is expected to be slower in Ontario and Quebec, with limited advances in full-time work expected for the coming quarter," said Manpower Canada vice president Byrne Luft in a statement.

Manpower said hiring intentions nationally fell two percentage points from the previous quarter to nine per cent. That represents a three percentage point drop from the outlook's forecast of a year ago. 

The weakest prospects are among manufacturers of non-durable goods.

Employment figures released last week by Statistics Canada showed a net loss of 7,000 jobs in February, with Quebec shedding 25,500 jobs.

Only 95,000 net new jobs have been created in Canada in the last year — a growth rate that is considered weak by historical standards. Job growth in the last six months has been especially weak. 


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Luxembourg kills EU tax haven crackdown

The Associated Press Posted: Mar 12, 2014 1:40 PM ET Last Updated: Mar 12, 2014 1:40 PM ET

European Union finance ministers failed once again Tuesday to agree on a sweeping new policy to fight tax evasion because of resistance from Luxembourg, a tiny country that long has prospered from a secretive banking culture.

EU Taxation Commissioner Algirdas Semeta said their failure was disappointing because, if approved, the legislation proposing an EU-wide automatic exchange of data on bank deposits would allow governments to "identify and chase up tax evaders."

Luxembourg, a duchy of barely 500,000 people, was able to shelve the legislation for the 28-nation bloc and its 500 million citizens because the decision required unanimous approval at Tuesday's meeting in Brussels.

Luxembourg Finance Minister Pierre Gramegna said he could not vote in favour and pushed the decision to a summit of EU government leaders next week.

Luxembourg has insisted for years it would support the proposed law only if non-EU banking hubs within Europe, particularly Switzerland, also sign up.

But as the EU's negotiations with Switzerland, Liechtenstein and three other nations on signing the agreement have made progress, Luxembourg has responded with new reasons for opposition, chiefly the risk that banks outside Europe would draw deposits away if the continent's banking rules are tightened too much.

German Finance Minister Wolfgang Schaeuble said he was confident that Luxembourg would drop its opposition at next week's summit.

"We've been working on this for such a long time, whether we agree today or in four weeks, that doesn't kill me either," he said.

EU officials say tax fraud and companies' aggressive cross-border tax avoidance schemes cost the bloc's governments an estimated 1 trillion euros ($1.4 trillion) a year, money needed in an age of sluggish growth and high debt across Europe.

The finance ministers did achieve some progress Tuesday. They drafted compromise proposals designed to break a deadlock between EU governments and the European Parliament on how to set up an agency that could restructure or shut down failing banks, the EU's so-called "single resolution mechanism."

The agency is intended to help stabilize the financial system and reduce the risk that taxpayers would have to fund future bank bailouts. Greek Finance Minister Yannis Stournaras said the new proposals sought to address lawmakers' criticisms. He and other finance ministers declined to provide details.

The proposals are to be presented at negotiations with lawmakers Wednesday in Strasbourg, France.

To avoid significant delays in setting up the agency, an agreement between the EU's governments and European Parliament leaders must be reached by the end of March. That would leave time for the legislation to be voted on before the Parliament dissolves for May elections.

Lawmakers have complained that the EU's original proposals gave national governments and regulators too much influence over the rescue authority's decisions, leaving room to play politics and give advantage to their domestic banks.

The new bank-rescue fund would be financed by a levy on banks that would raise 55 billion euros ($75 billion) over 10 years by 2026. However before the fund would be tapped, a failing bank's creditors, including holders of large deposits, would be forced to take losses.

Mar 12, 2014 4:41 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:15 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:41 PM ET

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GM recall of 1.6M cars prompts lawmaker probe

General Motors faced more pressure over its handling of a deadly defect in certain compact cars Tuesday as word leaked of a criminal investigation and two congressional committees opened probes into the matter.

The Justice Department is investigating whether GM broke any laws with its slow response to a problem with ignition switches in compact cars from model years 2003 to 2007, according to a person briefed on the matter. The probe is being handled by the U.S. Attorney's Office in New York, said the person, who asked not to be identified because the investigation has not been made public.

Spokesmen for the Justice Department and GM would not comment. The investigation was first reported by Bloomberg News.

At issue is why GM waited until February to recall 1.6 million older-model compact cars worldwide (including in Canada), even though it admitted knowing about the problem for a decade. The faulty ignition switches have been linked to 31 crashes and 13 deaths. Committees in the House and Senate also want to know why the government's road safety watchdog, the National Highway Traffic Safety Administration, didn't take action sooner.

GM announced last month it will replace ignition switches that can shut off car motors unexpectedly. When that happens, drivers lose power-assisted steering and brakes and can lose control of the cars. The ignition can slip from the run position to accessory or off, due partly to heavy key chains dangling from the steering column.

Also, if the ignition switch isn't in the run position, air bags may not inflate if a crash occurs.

An Associated Press review of a NHTSA database found that drivers started submitting complaints about the problem in early 2005, shortly after the first Chevrolet Cobalt went on sale. The review of complaints about the Cobalt, GM's top-selling small car in the mid-2000s, found 173 instances of engine stalling or air bags failing to deploy, both symptoms of the ignition problem. Many drivers reported problems with keys sticking in the ignition in addition to the stalling.

Fred Upton of Western Michigan, the chairman of the House committee, said in a statement Monday that a hearing will be held in the coming weeks.

Marketing expert Ken Wong of Queen's University says the damage to GM's reputation is enormous. "[It's] catastrophic, not only because the incident occurred, but because there is substantial evidence that GM was aware of the incident long before it took any corrective action."   

Congress passed legislation in 2000 requiring automakers to report safety problems quickly to NHTSA. The laws came after an investigation into a series of Ford-Firestone tire problems.

Upton said the committee wants to know if GM or the agency missed something that could have flagged the problems sooner.

"If the answer is yes, we must learn how and why this happened, and then determine whether this system of reporting and analyzing complaints that Congress created to save lives is being implemented and working as the law intended," Upton said.

NHTSA has said the rate of problems in the GM cars was not significantly different from similar vehicles.

The prospect of congressional hearings means more bad publicity for GM, which is trying to distance itself from a reputation for building lousy cars. The company has said it's more focused on quality since emerging from bankruptcy protection in 2009.

"It's the old GM haunting the new GM," said Jake Fisher, director of auto testing at Consumer Reports magazine. "They have a lot of the old products still hanging around."

Fisher said GM's new cars and trucks will have to be better than the competition to lure back buyers who swore years ago to never again to buy a GM car.

NHTSA already has demanded information from GM about when it knew of the ignition problem. The agency could fine GM up to $35 million for a delayed response. Automakers must report safety problems to NHTSA within five days of learning about them.

GM said in a statement that it's co-operating with NHTSA and the House committee.

On Feb. 13, GM announced the recall of more than 780,000 Cobalts and Pontiac G5s (model years 2005-2007). Two weeks later it added 842,000 Saturn Ion compacts (2003-2007), and Chevrolet HHR SUVs and Pontiac Solstice and Saturn Sky sports cars (2006-2007).

GM said Monday that it has hired attorney Anton Valukas to investigate the company's actions before the recall. Valukas, who investigated the 2008 collapse of Lehman Brothers for a bankruptcy court. GM has promised an "unvarnished" investigation into the recall.


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OSC to accept 'no-contest' settlement agreements

CBC News Posted: Mar 11, 2014 3:57 PM ET Last Updated: Mar 11, 2014 5:25 PM ET

The Ontario Securities Commission has decided to let some individuals and companies settle misconduct disputes with the regulator without formally having to admit to any wrongdoing.

The new policy, often referred to as a no-contest settlement, is aimed at speeding up the whole enforcement process.

Under the old rules, the OSC required some admission of wrongdoing before a settlement could take place. That made for often difficult negotiations as defence lawyers worried that such admissions could leave their clients more vulnerable to other legal action from shareholders. 

The OSC says its staff are continuing to explore the possibility of introducing a whistleblower program that would reward tipsters who provide the OSC "with actionable information about misconduct in the marketplace." 

The OSC said it would be up to the commission to accept or reject any proposal to settle a case with a no-contest agreement.

The commission says serious cases of wrongdoing — including cases of abusive, fraudulent or criminal conduct — will still require formal admissions of misconduct. A no-contest settlement will also not be allowed in cases where the accused "misled or obstructed" staff during the investigation.?

"When heightened accountability from respondents is paramount, we will continue to seek admissions as part of any proposed settlement agreement,"? said Tom Atkinson, the OSC's director of enforcement, in a statement.

An investor protection advocacy group says it has some misgivings about the new policies. 

"We're concerned that they (the policies) may have the overall effect of reducing deterrents and end up being viewed . . . (by) wrongdoers as a licence fee for wrongdoing," said Neil Gross, executive director of the Canadian Foundation for Advancement of Investor Rights (FAIR). 

"You can pay a fine and be on your merry way."

The OSC said it assessed more than $80 million in administrative penalties, disgorgement orders and settlement amounts in 2012-13.

No-contest settlements have been a hallmark of U.S. securities policy for many years. The U.S. Securities and Exchange Commission often reaches huge settlements with targeted companies or individuals without them having to formally acknowledge wrongdoing.  

That has been controversial. In 2011, for example, a U.S. federal judge rejected a $285-million US settlement that Citigroup reached with the SEC, in part because the financial giant was not required to admit any guilt.

The SEC had accused the bank of betting against a complex mortgage investment in 2007 — making $160 million US in the process — while investors lost millions.

With files from The Canadian Press Mar 12, 2014 4:41 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:15 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:41 PM ET

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Ottawa's 'dangerous' meddling biggest threat to housing: economist

Canada's hot housing market isn't in bubble territory, according to a new report which argues that it's the federal government's "dangerous" tightening of mortgage rules that poses the biggest threat to home prices.

That view, from housing market economist Will Dunning, runs contrary to many readings of Canada's housing sector.

Many analysts have examined the state of housing in this country and declared it overheated, overvalued, and ripe for a tumble in prices as soon as interest rates begin to rise.

Nonsense, says Dunning, who runs a real estate market research firm and frequently consults for the mortgage industry. 

For one thing, he dismisses some of the data that groups like the OECD have used to justify their diagnosis of a housing bubble as "badly flawed." 

The OECD report found that based on the ratio of house prices to rents, Canadian real estate is overvalued by as much as 60 per cent. But Dunning says the particular house-price-to-rent ratio used is inaccurate because it overestimates house price growth and underestimates the pace of rent increases. 

'Government actions to slow the housing market are not only unnecessary. They are also dangerous.'- Housing economist Will Dunning

Looking at house prices, Dunning says there is room to accommodate a sizable increase in house prices of as much as 25 per cent over the next two years, along with a rise in interest rates of as much as one percentage point from current levels.

"Rather than being overvalued, house prices in Canada are fairly valued, and they may even be undervalued," he writes in a report released Wednesday.

Dunning instead argues that it is Finance Minister Jim Flaherty who has created "dangerous" conditions for the housing market by tightening mortgage rules on four separate occasions.

"Government actions to slow the housing market are not only unnecessary," says Dunning. "They are also dangerous."

He says the most recent change, to eliminate 30-year amortizations for insured mortgages, "took demand out of a housing market that was already in a state of balance." He likened the effect of that one rule change to a one percentage point increase in mortgage rates.

"The deliberate reduction of housing demand, which is now clearly visible in the new and existing arenas, creates a risk that prices could fall, unnecessarily. Once prices start to fall, the outcome is unpredictable," he writes.

Dunning's report comes as a closely-watched indicator showed Canadian housing prices hitting a record high. The Teranet-National Bank composite price index rose 0.3 per cent month-over-month in February, led by gains in Western Canada.

Over the last 12 months, the index has increased by 5.0 per cent nationally. Prices in Calgary rose 9.6 per cent year-over-year and in Vancouver by 7.7 per cent. Toronto prices were up 6.1 per cent. 

But some markets saw year-over-year drops. Prices in Victoria fell 3.4 per cent, Halifax dropped 4.7 per cent and Ottawa-Gatineau slipped 0.6 per cent.

The Teranet-National Bank index tracks average home prices in 11 metropolitan markets based on data collected from public land registries.


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Fuel costs to trim record airline profits

Rising jet fuel prices will eat into the world's airline profits, but the industry is still on track for a record year, an airline lobby group forecast Wednesday.

The International Air Transport Association, which represents 240 airlines, forecasts that the global airline industry will earn a profit of $18.7 billion in 2014. That's a record. But the figure is $1 billion lower than its previous profit estimate in December.

North American airlines are expected to be the industry's biggest profit driver, with record 2014 profits of $8.6 billion. That's more than double the previous most profitable year — 2010's $4.2 billion.

The Geneva-based group now forecasts that fuel will average $108 US a barrel, up $3.50 from previous projections.

That will add $3 billion to the industry's fuel bill this year — a figure that will be partially offset by stronger demand in passenger and cargo traffic as the global economy recovers.

"“In general, the outlook is positive," said IATA director general Tony Tyler in a statement. "The cyclical economic upturn is supporting a strong demand environment. And that is compensating for the challenges of higher fuel costs related to geopolitical instability."

But he said industry returns remain at an "unsatisfactory level with a net profit margin of just 2.5 per cent." 

Tyler credits industry consolidation and joint ventures with helping to improve the bottom line.

Industry revenues are expected to total $745 billion this year, with average profit per passenger of $5.65.

Besides rising fuel costs, the airline industry also points to such geopolitical risks as the decision by Venezuela to prevent airlines from taking profits out of the country and the crisis in Ukraine.

The disappearance of Malaysia Airlines Flight MH370 over southeast Asia is, at this point, another unknown.   


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Average Wall St. bonus up 15% to $164,530 US

CBC News Posted: Mar 12, 2014 9:44 AM ET Last Updated: Mar 12, 2014 8:31 PM ET

The average Wall Street banker's bonus last year rose to the highest level since the recession, and up to the third highest figure on record, new data out of the N.Y. state comptroller's office showed Wednesday.

"Wall Street navigated through some rough patches last year and had a profitable year in 2013," New York State Comptroller Thomas P. DiNapoli said. "Securities industry employees took home significantly higher bonuses on average."

The typical Wall Street worker took home $164,530 US in bonuses last year, the data shows. That's up 15 per cent from 2012's level and dwarfs compensation seen in any other industry.

The most recent data from Statistics Canada shows the average salaried worker earned $933 a week in December 2013. That works out to just over $48,000 a year — less than a third what Wall Street bankers were paid on top of their base salaries.

There's also evidence, however, that New York bankers may feel they're earning their pay. Total reported profits for broker/dealer operations among the big banks totalled $16.7 billion in 2013. That's 30 per cent less than the $23.9 billion they made in 2012 but still strong by historical standards.

Indeed, the industry as a whole has definitely rebounded from the financial crisis it started. Wall Street's securities industry has now been profitable for five consecutive years, including the three best years on record, the comptroller's office said.

If there's an area in which Wall Street is still hurting, it's likely in job numbers. DiNapoli estimates the securities industry employed 165,200 workers in New York City in December 2013, which is 12.6 per cent fewer workers than before the financial crisis. 

It's still an economic engine for New York, though. Wall Street makes up five per cent of the private sector jobs in New York, but it's responsible for 22 per cent of all the wages paid. And the state collected $10.3 billion in taxes from the industry last year, the data shows.

Mar 12, 2014 4:41 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:15 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:41 PM ET

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Economy will rebound after rough winter, OECD says

Brutal winter weather is holding back the global economy, but it's on track for solid growth later in the year, a major economic think-tank says.

The Organization for Economic Co-Operation and Development said in its quarterly assessment for the global economy that the world's developed economies are generally performing strongly and getting back to levels of growth and activity that existed before 2008, when the recession began.

It's a different story on North America, however, which has been dealing with a particularly nasty bout of winter weather. It's been so bad that growth is expected to be negligible when the data come in for the first three months, in both the U.S. and Canada.

U.S. growth is expected to come in at around 1.7 per cent for the January to March period. In Canada, the number is even bleaker — a mere 0.5 per cent. Both figures are well behind growth rates seen elsewhere in the developed world.

The average growth rate across G7 countries is expected to be 2.2 per cent.

"The United States and Canada are both also expected to experience an uneven pattern of growth in the near term, owing in part to the disruptive effect of repeated episodes of severe winter weather," the think-tank said.

"A number of activities were restrained by the storms and cold temperatures, which is likely to depress first-quarter GDP, with some bounceback effect in the second quarter in the absence of further negative shocks."

But the slowdown, even in chilly North America, will be temporary, the OECD says, after winter eventually releases its icy grip. Canada's economy will expand by 2.4 per cent in the spring quarter, the OECD predicts.

In almost all economies, consensus forecasts for 2014 have ratcheted up over the last few months.

The North American slowdown actually started in the last quarter of 2013, as the U.S. government shutdown caused economic activity overall to be slower than it would have been otherwise.


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Luxembourg kills EU tax haven crackdown

The Associated Press Posted: Mar 12, 2014 1:40 PM ET Last Updated: Mar 12, 2014 1:40 PM ET

European Union finance ministers failed once again Tuesday to agree on a sweeping new policy to fight tax evasion because of resistance from Luxembourg, a tiny country that long has prospered from a secretive banking culture.

EU Taxation Commissioner Algirdas Semeta said their failure was disappointing because, if approved, the legislation proposing an EU-wide automatic exchange of data on bank deposits would allow governments to "identify and chase up tax evaders."

Luxembourg, a duchy of barely 500,000 people, was able to shelve the legislation for the 28-nation bloc and its 500 million citizens because the decision required unanimous approval at Tuesday's meeting in Brussels.

Luxembourg Finance Minister Pierre Gramegna said he could not vote in favour and pushed the decision to a summit of EU government leaders next week.

Luxembourg has insisted for years it would support the proposed law only if non-EU banking hubs within Europe, particularly Switzerland, also sign up.

But as the EU's negotiations with Switzerland, Liechtenstein and three other nations on signing the agreement have made progress, Luxembourg has responded with new reasons for opposition, chiefly the risk that banks outside Europe would draw deposits away if the continent's banking rules are tightened too much.

German Finance Minister Wolfgang Schaeuble said he was confident that Luxembourg would drop its opposition at next week's summit.

"We've been working on this for such a long time, whether we agree today or in four weeks, that doesn't kill me either," he said.

EU officials say tax fraud and companies' aggressive cross-border tax avoidance schemes cost the bloc's governments an estimated 1 trillion euros ($1.4 trillion) a year, money needed in an age of sluggish growth and high debt across Europe.

The finance ministers did achieve some progress Tuesday. They drafted compromise proposals designed to break a deadlock between EU governments and the European Parliament on how to set up an agency that could restructure or shut down failing banks, the EU's so-called "single resolution mechanism."

The agency is intended to help stabilize the financial system and reduce the risk that taxpayers would have to fund future bank bailouts. Greek Finance Minister Yannis Stournaras said the new proposals sought to address lawmakers' criticisms. He and other finance ministers declined to provide details.

The proposals are to be presented at negotiations with lawmakers Wednesday in Strasbourg, France.

To avoid significant delays in setting up the agency, an agreement between the EU's governments and European Parliament leaders must be reached by the end of March. That would leave time for the legislation to be voted on before the Parliament dissolves for May elections.

Lawmakers have complained that the EU's original proposals gave national governments and regulators too much influence over the rescue authority's decisions, leaving room to play politics and give advantage to their domestic banks.

The new bank-rescue fund would be financed by a levy on banks that would raise 55 billion euros ($75 billion) over 10 years by 2026. However before the fund would be tapped, a failing bank's creditors, including holders of large deposits, would be forced to take losses.

Mar 12, 2014 4:41 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:15 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:41 PM ET

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Ontario woman accused in penny stock fraud calls investor losses 'horrifying'

An Ontario woman who was part of a massive penny stock fraud scheme says she thought she was just helping her boyfriend build his business and now feels terrible about the loss of investors' money.

"This is the worst conceivable thing in the whole world," Andrea McCarthy told a sanctioning hearing at the Ontario Securities Commission on Wednesday.

"People worked hard their whole lives to have money and to have it taken away from them is horrifying," she said.

McCarthy, who acted as a director and officer for BFM Industries Inc. and Liquid Gold International Inc., was found in January by the OSC to be a knowing participant in the scheme. It also said she "illegally distributed" securities and trades without registering with the OSC.

It is alleged that from November 2008 to December 2010, the two companies defrauded 32 foreign investors by selling them $445,000 of worthless stock, and said McCarthy had been responsible for handling the day-to-day operations at the companies, including communicating with investors and withdrawing money from corporate accounts.

But in her testimony on Wednesday, McCarthy, 41, suggested she was simply following instructions from her boyfriend, Sandy Winick, who now faces criminal charges in the U.S. related to a fraud scheme, and said didn't think to question his requests.

"People were constantly asking Sandy for money; he was constantly giving money to people," she said.

McCarthy said she left a job at her ex-husband's company after meeting Winick, who began supporting her financially.

She didn't know what Winick actually did for a living and found him secretive about his businesses, but she was happy to incorporate BFM and list herself as a director when he asked.

"I didn't really appreciate the inner workings of it," she said.

"I thought it was exciting that he was building something I'd be able to work at and feel valuable."

The company seemed legitimate, she added, and she didn't think it was unusual when he also asked her to put her name on a bank account for Liquid Gold.

The pair had several joint accounts as well, and McCarthy was in charge of most of Winick's banking, which she did following specific instructions from him.

Aside from day-to-day living expenses, McCarthy said she received little profits from the alleged scheme beyond an expensive handbag and jewelry, which she later sold.

McCarthy's lawyer, Naomi Lutes, argued McCarthy's limited financial means should be considered by the commission as they deliberate her penalty, as should her willingness to co-operate with investigators and her show of remorse.

McCarthy has no assets, savings or investments, and was forced to cash in her RRSPs to pay her legal fees, Lutes said. She also recently sold her home.

"She's not saying that she didn't make mistakes here and shouldn't have asked more questions," said Lutes, who described McCarthy as a "financially unsophisticated woman."

Lutes is recommending a penalty of $23,300 plus a nominal administrative fine, and says McCarthy does not dispute a proposed 15-year ban on trading in securities.

Jonathon Feasby, a lawyer for the OSC, initially suggested staff were looking for $102,000 in repayment plus $50,000 in administrative fees, but acknowledged there were mitigating circumstances in the case.

OSC commissioner James Carnwath reserved his decision Wednesday.

The OSC has already banned Winick and his business partner, Gregory Curry, from securities trading and ordered them to pay more than $1 million in penalties for breaking securities law.

Those sanctions were related to separate schemes involving securities of BFM, Liquid Gold and a third company called Nanotech Industries Inc.

Winick and Curry are accused by the U.S. Attorney's office of being the leading figures in fraud schemes involving $140 million US and spanning dozens of countries, including Canada.

The two men were arrested in Thailand last summer after a multi-year investigation involving the FBI and the RCMP that also relied on wiretaps in the U.S. and undercover agents abroad.

It is believed there are tens of thousands of victims.

American authorities have also ordered Winick to pay back roughly $3.2 million in "ill-gotten gains" obtained through what they call an "illicit trading scheme" involving another penny stock issuer.


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Mark Carney policies favoured condos over factories, CIBC says

CBC News Posted: Mar 12, 2014 4:09 PM ET Last Updated: Mar 12, 2014 5:14 PM ET

The chief economist of one of Canada's largest banks pointed the finger Wednesday at Mark Carney for a monetary policy that pumped up house prices and the loonie while hurting Canada's manufacturing output in the long run.

In a recent note, CIBC's chief economist Avery Shenfeld said monetary policy under Mark Carney's watch at the Bank of Canada left the economy in worse shape today than it could otherwise have been.

Canada's largest trading partner, the U.S., is finally showing signs of robust expansion after a lengthy recession and recovery. But Canada's economy isn't taking as much advantage of that as it normally would, because there is less production capacity available to be ramped up at factories.

One of the effects of the central bank's action under Carney's helm was a large run-up in the value of the Canadian dollar. The loonie repeatedly traded above par with the U.S. greenback, spiking above 105 cents US a number of times in 2011.

While the suddenly strong loonie had good and bad effects on many aspects of Canada's economy, one area where it was a definite negative was in manufacturing. 

A strong currency makes Canadian goods more expensive internationally, which makes it a tougher sell for a company that depends on exports to decide to expand operations here. The massive amounts of stimulus at the time were drawing money away from the U.S. dollar and pumping up the value of almost every other currency against it, the loonie included.

But Shenfeld notes that unlike other countries which took steps to offset it, Canada's central bank at the time took a hands-off approach and allowed the loonie to rise unimpeded. "Rather than intervene to neutralize the impact of hot money capital flows on the exchange rate (as the Swiss did) the Bank of Canada tried to offset the impact ... by keeping interest rates low enough to stimulate housing and domestic consumption," Shenfeld said.

The result, he said, was the ensuing real estate boom, as cheap lending gave people an incentive to borrow. Those moves also came at a time when companies were making long term decisions "on where to retain plants," Shenfeld said, "and where to shutter them for good."

"In effect, monetary and exchange rate policy traded off more condos for fewer factories," he said in the note.

It's that lack of manufacturing capacity that's now holding the economy back, as Canada is less able to expand quickly to increased demand.

In recent public statements, Carney's successor Stephen Poloz and other bank officials have speculated that part of Canada's difficulties returning to pre-recession levels in exports is that there are about 9,000 fewer Canadian exporting companies in existence than was the case in 2008, and others have ramped down production capacity.

The impact of such an exodus is that even if foreign demand for Canadian products increases, there simply aren't enough companies around to fill it.

Manufacturing woes have improved a bit lately as the dollar has dropped back to a more "appropriately valued" level, as Shenfeld puts it, around 90 cents US.

"But given how infrequently production location decisions come up, the legacy of earlier plant closures will be with us for years to come," he said.

CIBC is expecting the Canadian economy will expand by 2.1 per cent this year. That's about a half a percentage point less than what the Bank of Canada is expecting.

With files from The Canadian Press Mar 12, 2014 4:41 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:15 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:41 PM ET

The data on this site is informational only and may be delayed; it is not intended as trading or investment advice and you should not rely on it as such.


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TSX, Canadian dollar lose ground on commodity worries

The resource sector inflicted further losses on the Toronto stock market as commodities continued to retreat amid worries about Chinese growth.

The S&P/TSX composite index dropped 51.05 points to 14,216.18. The commodity-sensitive Canadian dollar fell 0.28 of a cent to 89.79 cents US.

U.S. indexes also declined as the Dow Jones industrials lost 67.2 points to 16,284.05, the Nasdaq was down 22.49 points to 4,284.69 and the S&P 500 index dropped 9.24 points to 1,858.39.

The catalyst for the latest round of concerns about growth in the world's second-biggest economy was data released over the weekend showing a drop of 18 per cent in Chinese exports during February. That data had followed news at the end of last week that Chinese authorities had given the go ahead for the country's first credit default.

Copper has tumbled in recent days to the lowest level since mid-2010, having fallen 8.3 per cent over the last three sessions. It was down a penny to US$2.94 a pound while oil gave back $1.74 to US$98.29 a barrel.


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Feta, parmesan, Gorgonzola cheese names prompt U.S.-Europe trade stink

The Associated Press Posted: Mar 12, 2014 11:35 AM ET Last Updated: Mar 12, 2014 11:50 AM ET

Errico Auricchio produced cheese with his family in Italy until he brought his trade to the United States more than 30 years ago. Now, the European Union is saying his cheese isn't authentic enough to carry a European name.

As part of trade talks, the EU wants to ban the use of names like Parmesan, feta and Gorgonzola on cheese made in the United States. The argument is that the American-made cheeses are shadows of the original European varieties and cut into sales and identity of the European cheeses.

Auricchio, president of Wisconsin-based BelGioioso Cheese Inc., says he has no idea what he would call his Parmesan if he had to find a new name.

"I Can't Believe It's Not Parmesan," he jokes.

The Europeans say Parmesan should only come from Parma, Italy, not from Auricchio's plant or those familiar green cylinders that American companies sell. Feta should only be from Greece, they say, even though feta isn't a place. The EU argues it "is so closely connected to Greece as to be identified as an inherently Greek product."

So, a little "hard-grated cheese" for your pasta? It doesn't have quite the same ring as Parmesan.

U.S. dairy producers, cheesemakers and food companies are all fighting the idea, which they say would hurt the $4 billion domestic cheese industry and endlessly confuse consumers.

"It's really stunning that the Europeans are trying to claw back products made popular in other countries," says Jim Mulhern, president of the National Milk Producers Federation, which represents U.S. dairy farmers.

The European Union would not say exactly what it is proposing or even whether it will be discussed this week as a new round of talks on an EU-United States free trade agreement opens in Brussels.

European Commission spokesman Roger Waite would only say that the question "is an important issue for the EU."

That's clear from recent agreements with Canada and Central America, where certain cheese names were restricted unless the cheese came from Europe. Under the Canadian agreement, for example, new feta products manufactured in Canada can only be marketed as feta-like or feta-style, and they can't use Greek letters or other symbols that evoke Greece.

Though it has not laid out a public proposal, the EU is expected to make similar attempts to restrict marketing of U.S.-made cheeses, possibly including Parmesan, Asiago, Gorgonzola, feta, fontina, grana, Muenster, Neufchatel and Romano.

And it may not be just cheese. Other products with traditional ties to European countries that could be affected include bologna, Black Forest ham, Greek yogurt, Valencia oranges and prosciutto, among other foods.

The trade negotiations are important for the EU as Europe has tried to protect its share of agricultural exports and pull itself out of recession. The ability to exclusively sell some of the continent's most famous and traditional products would prevent others from cutting into those markets.

Concerned about the possible impact of changing the labels on those popular foods, a bipartisan group of 55 senators wrote U.S. Trade Representative Michael Froman and Agriculture Secretary Tom Vilsack this week asking them not to agree to any such proposals by the EU.

Led by New York Sen. Chuck Schumer, D-N.Y., and Pennsylvania Sen. Patrick Toomey, R-Pa., the members wrote that in the states they represent, "many small- or medium-sized, family-owned businesses could have their businesses unfairly restricted" and that export businesses could be gravely hurt.

Schumer said artisanal cheese production is a growing industry across New York.

"Muenster is Muenster, no matter how you slice it," he says.

Trevor Kinkaid, a spokesman for the U.S. trade representative, said that conversations on the issue are in the early stages but that the U.S. and E.U. have "different points of view" on the topic.

The agency wouldn't disclose details of the negotiations, but Kinkaid said the U.S. government is "committed to increasing opportunity for U.S. businesses, farmers and workers through trade."

Large food companies that mass produce the cheeses are also fighting the idea. Kraft, closely identified with its grated Parmesan cheese, says the cheese names have long been considered generic in the United States.

"Such restrictions could not only be costly to food makers, but also potentially confusing for consumers if the labels of their favourite products using these generic names were required to change," says Kraft spokesman Basil Maglaris.

Jaime Castaneda works for the U.S. Dairy Export Council and is the director of a group formed to fight the EU changes, the Consortium for Common Food Names. He says the idea that great cheese can only come from Europe "is just not the case anymore."

He points out that artisanal and locally produced foods are more popular than ever here and says some consumers may actually prefer the American brands. European producers can still lay claim to more place-specific names, like Parmigiano-Reggiano, he says.

"This is about rural America and jobs," he says.

Auricchio and other producers say they are angry because it was Europeans who originally brought the cheeses here, and the American companies have made them more popular and profitable in a huge market.

"We have invested years and years making these cheeses," Auricchio says. "You cannot stop the spreading of culture, especially in the global economy."

Mar 12, 2014 4:41 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:15 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:41 PM ET

The data on this site is informational only and may be delayed; it is not intended as trading or investment advice and you should not rely on it as such.


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Datawind aims to make $20 tablet computer

The Canadian makers of the "world's lowest cost tablet," the UbiSlate 7Ci, think $37.99 still isn't cheap enough.

They figure there's still room to knock about 50 per cent off its price and make tablet ownership possible for anyone and everyone.

"This idea is to bridge the digital divide, it's really that simple, the idea is to overcome the affordability barrier," says Datawind CEO Suneet Singh Tuli during an interview at his Toronto-area office, one of five the company has in Canada, England, Germany and India.

"We think as the Scandinavians do that (internet access) is a fundamental human right."

On the second floor of an unassuming strip mall — strategically located within spitting distance of Toronto's Pearson airport, where Tuli says he's coming from or going to a few times a week — the Datawind team is working on its strategy to sell cut-rate "good enough" tablets.

sm-220-suneet-tuli-rtr2s8ss Datawind CEO Suneet Singh Tuli says the company's founders think internet access is a fundamental human right. (Parivartan Sharma/Reuters)

The company is best known for its work with the Indian government, which it supplied with low-cost tablets for a program to get technology into the hands of students.

Datawind was recently named one of the world's 50 smartest companies by the MIT Technology Review magazine for launching those tablets, branded under the Aakash name.

While India's government is considering proposals from Datawind and other vendors to make the next version of the Aakash, the company has turned its attention to North America and the U.K. to sell its tablets directly to consumers under the UbiSlate brand.

The cheapest version of the seven-inch tablet, the UbiSlate 7Ci, has a not-too-sharp screen resolution of 800 by 480 pixels, four gigabytes of memory, half a gigabyte of RAM, runs a current version of Google's Android operating system and can only get online with WiFi. It sells online for $37.99 plus taxes and shipping. The next model up, the UbiSlate 7C+, costs an additional $42 to gain access to EDGE mobile networks. The most expensive model, the UbiSlate 3G7 at $129.99 plus taxes and shipping, has a better screen and processor and can also access HSDPA 3G mobile networks.

Tuli says the company can sell the tablets so inexpensively because of the scale of its production runs and the fact that it makes its own screens, which helps boost profit margins. A preloaded web browser also displays ads that generate additional revenue for Datawind — although users can choose to download another ad-free browser — and the company monetizes some downloads of apps.

Datawind has also kept its prices down by selling directly to consumers through its website and not seeking retail partners.

"Something that costs $50 to make ends up at $150 easily at retail," he says.

"In our case, something that costs $32 to make ends up at $38 in the consumers' hands."

Tuli says he envisions the price of Datawind's lower-end tablet slipping below $20 "within the next year or two," especially if revenues from ads and apps grow.

"We think pricing will continue coming down and we think features will continue going up. We will keep our high end between $100 to $150, we don't see ourselves going up anything higher than that, but we'll continue pushing the barriers on the lower end," he says.

While he insists that Canadian consumers won't find the tablets lacking, the reviews for Datawind's tablets in India were far from positive. And anyone who has used an iPad or a higher-end Android tablet will notice a major difference in performance.

But he believes there is a strong market of consumers who are willing to trade performance for a low price.

"What we tried to focus on was realizing that for our customer, price is the most important feature and starting with that element we said, 'What can we bundle in to provide a performance experience that would be good enough for them?"' Tuli says.

"You want something for your kids to take to school.... Kids are going to lose them or break them and you want something that you're not worried (about)."


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