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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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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Private contractor to take lead in fixing U.S. health insurance website

The Associated Press Posted: Oct 25, 2013 3:24 PM ET Last Updated: Oct 25, 2013 3:24 PM ET

Nearly a month into the dysfunctional rollout of the U.S. government's new health insurance website, Obama administration officials said Friday they have identified dozens of problems that need fixing and tapped a private company to take the lead in solving them.

Jeffrey Zients, a management consultant brought in by the White House to assess the extent of problems with the HealthCare.gov site, told reporters his review found issues across the entire system, which is made up of layers of components interacting in real time with consumers, government agencies and insurance company computers.

It will take a lot of work, but "HealthCare.gov is fixable," said Zients. The vast majority of the issues will be resolved by the end of November, he said, and there will be many fewer errors. He stopped short of saying the problems will go away completely.

The administration also said it is promoting one of the website contractors, Quality Software Systems Inc., to take on the role of "general contractor" shepherding the fixes. QSSI was responsible for two components of the website, a major linchpin that works relatively well, and an accounts registration feature that froze and caused many of the initial problems.

HealthCare.gov was supposed to be the online portal for uninsured Americans to get coverage under President Barack Obama's health care law. Touted as the equivalent of Amazon.com for health insurance, it became a huge bottleneck immediately upon launch Oct. 1. The flop turned into an embarrassment for Obama and will likely end up as a case study of how government technology programs can go awry.

The briefing from Zients came a day after executives of QSSI and the other major contractor, CGI Federal, a subsidiary of Montreal-based CGI Group, told Congress that the government didn't fully test the system and ordered up last-minute changes that contributed to clogging the system. Next week, Health and Human Services Secretary Kathleen Sebelius is scheduled to testify.

Zients gave some new details about the extent of the problems, but administration officials are still refusing to release any numbers on how many people have successfully enrolled. Although 700,000 have applied for coverage through the new online markets, it's believed only a fraction of that number actually managed to sign up. Prior to the website going live, an administration estimate projected nearly 500,000 people would sign up in October alone.

The marketplaces are the gateway to obtaining health insurance under the new health care law, which requires most Americans to have coverage by Jan. 1. Middle-class people who don't have insurance on the job can purchase a private plan with new tax credits to make the premiums more affordable. Low-income people will be steered to an expanded version of Medicaid in states that agree to extend the safety net program.

The federal government is running the insurance markets or taking the lead in 36 states. The rest were set up by states themselves.

Zeints said almost daily fixes are already having an impact. For example, over 90 per cent of users can now complete one of the first steps, creating an account.

But the application process, which involves submitting and verifying personal information and income details, remains "volatile," he said. At one point, as few as one-third of users were getting through that part.

Zients said there are two big categories of problems. Performance issues involve the speed and reliability of the website. Functional issues are bugs that keep the software from working as intended. He said the government has a "punch list" of needed fixes that add up to dozens in each broad category.

Near the top of the list: insurers are getting enrolments with incomplete, incorrect or duplicate information.

Until now, officials at the federal government's Centers for Medicare and Medicaid Services have taken the lead operational role on HealthCare.gov. The federal agency operate a successful e-commerce site for Medicare coverage, but it appears to have gotten in over its head when it comes to Obama's law. QSSI will now be responsible for the execution.

The company is a subsidiary of UnitedHealth Group, the nation's largest health insurer. It built a component of the website that's called the federal data hub and appears to be working relatively well. The hub is a conduit for verifying consumers' personal information.

An executive of the parent company, Andrew Slavitt, told Congress this week that QSSI had concerns about the federal website and relayed those to the government. Officials said the company's new role as "general contractor" will be an expansion of its current contract.

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Justin Trudeau shares 'steadfast' Keystone XL support in D.C.

By Meagan Fitzpatrick, CBC News Posted: Oct 25, 2013 2:39 PM ET Last Updated: Oct 25, 2013 3:44 PM ET

Liberal Leader Justin Trudeau concluded his first visit to the U.S. capital on Friday after a series of meetings with White House officials and others and following a panel discussion a day earlier where he touted the benefits of building the proposed Keystone XL pipeline.

Trudeau appeared Thursday on a panel with Madeleine Albright, former U.S. secretary of state, and Julia Gillard, Australia’s former prime minister, at a conference hosted by the Centre for American Progress.

The Montreal MP said during the talk that he supports TransCanada’s proposed pipeline that would carry crude oil from Alberta to refineries on the Gulf Coast because it would be good for Canada and the U.S.

He acknowledged that his position may have surprised some in an audience that would have included strong critics of the project.

“There were some people who raised an eyebrow, absolutely,” Trudeau told reporters on Friday. “I'm seen as a strong, young progressive with an environmental background. The fact that I'd be talking positively about the project I think got people thinking about the fact that perhaps it's not as bad as it's been caricatured.”

Trudeau added that the pipeline is “an important energy infrastructure” for both countries, will be good for the Canadian economy and that it must be done in a sustainable and properly regulated way.

A decision on whether the controversial Keystone XL pipeline can go ahead is currently in the hands of U.S. President Barack Obama and it’s not clear when he will make it. Ministers in Harper’s cabinet have made multiple trips to Washington in recent years to lobby for its approval.  Alberta Premier Alison Redford is also a frequent visitor.

Now Trudeau has added his voice to the Canadian contingent of Keystone backers who push for its approval while in Washington. “My support for Keystone is steadfast,” he said while talking on a street near the Canadian Embassy.

Not far away there is a bus shelter with an anti-Keystone poster designed by Canadian Franke James in it. James was recently in the city along with Canadian environmentalist David Suzuki for a panel discussion sponsored by the Natural Resources Defence Council. They urged the Obama administration to reject Keystone.

Many environmentalists are opposed to the pipeline and some Americans are against it because they say it won’t create all the jobs its proponents say it will and is more in Canada’s interest than in America’s. Trudeau, however, said the U.S. will benefit from the pipeline.

Liberal Leader Justin Trudeau arrives to speak to reporters during his first official visit to Washington on Friday. (Susan Walsh/Associated Press)

“There are lots of American jobs involved and there's lots of opportunities for the United States as well,” he said. “There are many Americans who support Keystone as well, so I'm not particularly worried about it being an unbalanced deal. It's just part of a longstanding working friendship between our two countries.”

While Trudeau is in favour of the Keystone pipeline, he’s not supportive of the proposed Northern Gateway project that would transport oil from Alberta to British Columbia’s coast. “They are very, very different proposals,” the Liberal leader said. Keystone, for example, has been signed off on by Canada’s energy board while the Northern Gateway line would mean bigger risks to more ecologically sensitive areas and to people in B.C. who rely on the water for their livelihoods, he said.

"It's important that we get our resources to market, but it's also important that we understand that it's not just up to governments to grant permits anymore. We have to get communities to grant permission and that's something that we need to spend more time focusing on," Trudeau said.

He was also asked about the Senate scandal dominating politics back home and said he is “very proud” of the motion put forward by his party’s leader in the upper chamber, James Cowan. He said it would encourage an open hearing.

“I’m not being overly controversial when I say I believe in the rule of law and due process and I think that's important that we continue to fight for," said Trudeau.

But when asked about the government’s budget bill that could curtail some federal workers’ right to strike, Trudeau wouldn’t bite. He would only say that he supports collective bargaining and unions generally and that he didn’t want to criticize Harper while abroad. There is a traditional protocol in politics, that when followed, involves politicians not criticizing their country's government while outside their borders.

“I feel that when I'm on a foreign trip, on foreign soil, my primary role is as a representative of Canada and a representative of the Canadian people and I try not to be too critical,” Trudeau said.

Trudeau has travelled to more than 80 countries but had never been to Washington. He met with White House officials including Gene Sperling, director of the National Economic Council, and Jason Furman, who chairs the President’s Council of Economic Advisers, during his visit.

One of his goals on the trip was to build relationships that will be important in the years to come, Trudeau said, as he works toward a bigger goal – becoming prime minister.

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Canadian beef prices could fall as Tyson stops buying

One of the world's largest producers of meat says it will stop buying Canadian cattle because of the high cost of having to follow U.S. meat labelling rules.

The decision from Tyson Foods Inc. is expected to lead to a drop in prices for Canadian producers.

Martin Unrau, president of the Canadian Cattlemen's Association, says the decision is a huge blow to the industry.       

“The cattle we raise here are the exact same type of cattle that they raise in the U.S. under the same conditions. We are using the same products. So absolutely it's a trade barrier,” Unrau told CBC News.

Tyson is the third-biggest buyer of Canadian cattle and bought about 150,000 head last year.

"Other American buyers certainly could follow suit, and that's a real concern for us," said Agriculture Minister Gerry Ritz, adding that the Tyson decision shows Canada has to diversify and find new markets.

"We have a 70 per cent reliance on the Americans for processing and for purchasing livestock. We need to move away from that, and, of course, by moving product now into the European theatre, just as soon as we get [the Canada-European Union free trade deal] ratified, certainly is the right way to go."

Canada is challenging the U.S. country-of-origin meat labelling policy with the World Trade Organization and in the U.S. courts.

The regulations track beef and pork through the meat processing and distribution systems and require labels that state where animals are born, where they are slaughtered and where they are packed.

Labels would include such information as "born, raised and slaughtered in the United States" for American meat. Cuts of meat from other countries could carry labels such as "born in Canada, raised and slaughtered in the United States."

Tyson said  it is disappointed with the U.S. rules that require labels on meat products to contain detailed information about where the products come from. It also means that meat coming from different countries has to be segregated in a warehouse and labelled differently, increasing costs for the meat packers.

"Unfortunately, we don't have enough warehousing capacity to accommodate the proliferation of products requiring different types of labels due to this regulation," Tyson spokesman Worth Sparkman wrote in an email.

"As a result, we have discontinued buying cattle shipped to our U.S. beef plants directly from Canada effective mid-October."

Sparkman said Tyson would continue buying Canadian calves for U.S. feedlots.

Cattle shipments to the U.S. were cut in half in the first year after the U.S. proposed country-of-origin labelling in 2008. There was a 58 per cent drop in slaughter hog exports.

In November, the rules become even more stringent. The Tyson decision worries Canadian feedlot operators.

“I wouldn't' say it's a death knell but it's a further strain on our industry at a time when we were looking for some relief,” said Ben Thorlakson, who owns a feed yard near Airdrie, Alta.

“We have one fewer buyer and we only had five to start with … so it's just reduced the overall demand for our cattle … and therefore the prices are lower, but that's an overall effect of this country-of-origin labelling initiative.”

The Canadian Cattlemen's Association is part of a coalition that is in the process of appealing a U.S. court ruling last month. That ruling rejected a request for an injunction against the latest version of the U.S. label policy, which is to go into effect in November.

The coalition argues the policy would be costly and offer no food safety or public health benefit.

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Mackenzie Valley pipeline facing possible revival

There are growing signs that the stalled Mackenzie Valley pipeline project could get a new lease on life.

The federal government has quietly dusted off a $500-million socio-economic fund that would kick in if the project goes ahead. The Mackenzie Gas Projects Impact Fund was set up in 2006 but has remained dormant. It was included and updated in this week's budget implementation act.

The fund is not operational yet, but the timing means it's ready to go if construction starts on the pipeline.

Development of northern resources has been priority for Prime Minister Stephen Harper since he was elected in 2006. His government in 2009 set up the Canadian Northern Economic Development Agency (CanNor), for which Environment Minister Leona Aglukkaq is responsible.

The government "is committed to fostering a strong, prosperous and dynamic northern economy," Aglukkaq's office said in a written response to questions from CBC News.

"Should the CanNor minister be named responsible at some point for the fund, as the regional economic development agency for the North, the agency is well-positioned to deliver this fund on behalf of northern communities."

At the same time, there are signs the project may be commercially viable.

Imperial Oil and its partners are looking at options to turn the 1,200-kilometre northern gas pipeline into an liquefied natural gas project. LNG, as it is often called, is natural gas that's cooled to -162 C. This shrinks the volume of the gas by 600 times, making it easier to store and ship.

"As we look at strategic options for the Mackenzie resource one of the things we are looking at is … could gas from the Mackenzie potentially play a role in an LNG development scenario?" said Imperial spokesman Pius Rolheiser.

Imperial and its partners, Royal Dutch Shell, ConocoPhillips, Exxon Mobil and the Aboriginal Pipeline Group, received final approval from the National Energy Board in 2011 for the $16.2 billion project after more than six years of regulatory review. The pipeline was originally designed to carry natural gas down the Mackenzie Valley to Alberta and the U.S.

A glut in natural gas and slumping prices put the project on hold.

But earlier this year, Imperial and its majority partner Exxon Mobil Corp. applied for an LNG export permit from a future terminal in either Kitimat or Prince Rupert, B.C. The companies would draw from the gas fields they own in Canada, like those in the Mackenzie Delta.

"So in our assessment of a potential LNG project, one of the things we are looking at is, could gas from the Mackenzie Delta play a role in an LNG scenario?" said Rolheiser in an interview from Calgary. "But at this point we are in the early stages and we have not made any decisions on that."

(CBC)

The main forces behind this burst of activity are price and timing. Imperial has to report to the NEB on its decision to construct the pipeline by the end of this year and must provide an updated cost estimate. It has to start construction by the end of 2015.

And there is a growing market in Asia for liquid natural gas. While Rolheiser emphasizes that a decision has not been made, a source close to the project says the LNG option is very much in play.

"We are looking at all options here and there is more than one option for this pipeline," said the source.

Natural Resources Minister Joe Oliver just got back from a trip to China and South Korea, where he spent a lot of time talking about LNG. He says Canada's natural gas resources are an "immense economy opportunity that can benefit all Canadians."

And the pipeline would help tap that potential.

"That is why we are supportive of this important resource development opportunity, with a focus on supporting jobs, economic growth, environmental protection and constructive relationships with First Nations communities," Oliver wrote in an email to CBC News Thursday.

All this is very good news for the Northwest Territories that has been holding out hope for the on-again, off-again pipeline since the 1970s.

"We are hearing that the proponents are interested in seeing the Mackenzie gas get to market, which is a very positive sign for us, with a resource that has been stranded in the Mackenzie delta for forty years," said N.W.T. Industry Minister David Ramsay.

Ramsay said he has not officially heard that the project is definitely going ahead, but he's optimistic.

"Any talk of us getting a resource like to that to market is something we are encouraged to hear," he said in an interview from Yellowknife.

Ramsay said he hopes to get more details in early November.

The majority of people in the territory support the project because of the economic development it would bring. Aboriginal groups own one-third of it as part of the Aboriginal Pipeline Group.

While Imperial won't speculate on chances of the pipeline carrying LNG, Rolheiser notes the company has spent considerable time and money on this project and doesn't want to squander it.

"We made a significant investment in terms of our relationship with the people of the North as represented by the Aboriginal pipeline group and that is a terribly important asset to us," he said. 

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