PM Trudeau under fire for being soft on Chinese firm’s takeover of Canadian satellite-technology company

This past summer, Prime Minister Justin Trudeau’s Liberal government came under heavy fire from Canadians and Conservative politicians, as well as the U.S. defense and security professionals for Ottawa’s approval of a controversial Chinese firm’s takeover of a Vancouver satellite technology company without full-fledged national security review. This revealed Trudeau’s and his Liberal government’s very soft and “naïve” stance toward national security matters – and China.

This Canadian company, Norsat International sells military-sensitive satellite technologies and materials to the U.S. Department of Defense, U.S. Marine Corps, U.S. Army and the North Atlantic Treaty Organization (NATO). Its defense clients also include the Republic of Ireland Department of Defense, Taiwan Army and Scandinavian defense forces.

Therefore, the sale of Norsat to the Chinese firm, Hytera Communications Corp. of Shenzhen, should have substantial implications on the national security of not only Canada but also Western allies. But Trudeau’s Liberal Party government approved the sale after only routine security screening that all foreign takeovers of Canadian companies undergo – without conducting a full-scale national security review properly – required by law for the sale of companies that might affect Canada’s national security.

Canada’s Investment Canada Act requires full-scale scrutiny of proposed acquisition of Canadian companies by foreign companies when the acquisition raises concerns that national security might be affected. The clause requiring such strict security review was added to the Act during the Harper Conservative government to avoid any ad hoc decision that often causes national security controversy.

Trudeau, however, refuted at a news conference that there is no need to do any further reviews of the sale of Norsat to the Chinese telecom firm and that the sale will not harm Canada’s national security. He defended strongly his government’s decision to allow the Chinese firm to take over Norsat, saying that Canada’s professionals of national security agencies unearthed no significant national security risk in the initial government review and concluded that there are no further reviews needed.

Since media first reported about Norsat’s sale to Hytera in June, Trudeau’s comments flip-flopped. When asked by the Globe and Mail, he first said a full-fledged review was done, but it turned out that the government review was a preliminary review. He also said his government consulted with U.S. officials before deciding to approve Norsat’s sale, but would not disclose who in the U.S. Trump administration, neither what reaction the U.S. administration officials made.

U.S. national security experts are not easy to be convinced. The U.S. government, apparently concerned about the Norsat deal, was going to review on its own all Norsat contracts with Pentagon, saying that the takeover by a Chinese telecom giant of the Canadian company that supplies materials and technologies to the U.S. military would likely to have serious impacts on the U.S. security.

Norsat’s clients also include major media, such as CBS TV and Reuters, as well as NAV Canada, operator of the country’s civil air navigation service. The transfer of Norsat’s sensitive technologies used in the military, civil aviation and media to a Chinese company – which means in China that these technologies will eventually fall into the hands of the Chinese government and the military – will have no small implications on national security. But, Trudeau said – almost nonchalantly – in the Parliament in response to Opposition members that it would be no big deal from where and which company the particular technology comes. “It doesn’t matter what country it’s from or what deal it is.” (Globe and Mail, June 27)

These concerns about possible national security risks further increase when you are reminded that in March, Motorola Solutions of Chicago filed a lawsuit against Hytera, a giant radio transceiver and other wireless equipment manufacturer, alleging that the Chinese firm had obtained proprietary information illegally. Motorola claimed that three of its former engineers stole more than 7,000 proprietary technology files and provided them to Hytera. (Space News, June 15)

Michael Byers, Canada Research Chair in Global Politics and International Law at the University of British Columbia, said: “A review by CSIS would have warned that investments by the same Chinese company have raised security concerns in other countries.” According to Dr. Byers, Hytera’s takeover of a mobile digital-radio equipment maker in Cambridge, Britain, was only approved after strict security protections were imposed. (Globe and Mail, June 22)

A billionaire Chen Qingzhou owns majority of the company, but a Chinese sovereign owns more than 2% of the share.

Hytera said in a statement in reply to the Globe and Mail in June that it would “strictly obey local laws and regulations,” but did not make committal reply on how it intends to maintain contracts with clients, including the U.S. military. (Globe and Mail, June 27)

This is not the first case. In March this year, the Trudeau government reversed the decision by the former Conservative government that had blocked the sale of ITF Technologies to Hong Kong-based O-Net Communications, which is partially owned by the Chinese government. The Canadian Security Intelligence Service (CSIS) had opposed the takeover on grounds that it would result in the transfer of advanced military laser technology to China, eroding military advantage of Canada and its Western allies and raising their security risks.

CSIS officials considered O-Net is effectively controlled by the Chinese state as the company’s corporate statement indicates more than 25% of its shares are owned by a company that is subsidiary of Chinese state-owned China Electronics Corporation. (Globe and Mail, Jan. 23)

Needless to say, an overwhelming majority of Canadians oppose the sale of these two domestic high-technology companies with military customers to the controversial, if not suspicious, Chinese investors. A poll by Nanos Research conducted in late June found that 76% of Canadians oppose or somewhat oppose the takeover of Norsat (18% support or somewhat support), and nearly four-fifth or 78% of Canadians oppose or somewhat oppose China’s purchase of Montreal-based ITF Technologies. (Globe and Mail, July 2)

Prime Minister Trudeau has made deepening trade and economic relations with China a key foreign policy objective of his administration since he took power almost two years ago. Ottawa is now in the midst of exploratory free-trade talks.

Critics like Andrew Scheer, who became Conservative Party leader in May, are accusing the Liberal government of trying to “appease” China as it aims to negotiate free-trade agreement, by forgoing full national-security reviews. The center-left New Democratic Party (NDP) also has criticized, saying “This is not the same as selling to New Zealand. This is selling to a country with clear global ambitions and zero democratic accountability.”

It is well-known that China has introduced advanced Western technologies (by stealing, or forcing technology transfer through mergers and joint ventures) to modernize the industry and turn them to military use. It is also widely suspected that China is eager to conclude free-trade agreements with industrially advanced countries like Canada, because, once it has a free-trade agreement, Chinese firms’ investment in, or acquisition of, sensitive high-tech companies would be approved more smoothly without causing national security and nationalistic controversies.

It’s almost two years since Justin Trudeau took power, and has received praise for his generous policies to take more refugees into Canada and liberal social policies, including his personal sympathy for sexual minorities. But many of Canadians, including his supporters, are hoping that he realizes that it’s about time to learn about China’s nature and understand that Canada is a member of the Western alliance and responsible for the allies’ security, not just Canada’s. Otherwise, Canada’s neighbors cannot sleep well – including Japanese.

Footnote:
Shareholders of Norsat on June 22 voted in favor of the Hytera takeover.

Since the start of the Trudeau government, Chinese investment cases in Canada have been conspicuously increasing in non-military but strategically important sectors – not just in military and security-related areas. Some examples. In February, Ottawa approved the sale of one of British Columbia’s biggest retirement-home chains to a Beijing-based insurance giant with a murky ownership structure, giving Anbang Insurance Group a foothold in Canada’s health-care sector.

In July, a company with ties to a state-created Chinese investment firm, GM resorts, acquired the Grouse Mountain ski resort and entertainment complex owned by the McLaughlin family since 1989 – an important Vancouver landmark – causing shocks and concerns to local people. The new owners promised no changes to staff, management or operations, but many are wondering about the ultimate intentions of the company and its Chinese affiliate.

Justin Trudeau’s father and former Prime Minister Pierre Trudeau, one of Canada’s most respected politician, recognized China and opened diplomatic ties with Beijing on Oct. 13, 1970, ahead of the U.S. any other Western allies, and maintained close relations with China. Therefore, the son is said by many observers to be highly conscious – probably more conscious than any other politician – about the father’s achievements and this may be influencing his China policy. But he must remember that his father was not just nice to China.

 

By Yoshikazu Ishizuka, Senior Consultant, TOCS

Surge of international students at Canadian universities, B-schools

Canadian universities are increasingly popular with international students. Particularly, interests from American students are rising to record levels, as more of them appreciate Canada as a tolerant, stable and freer nation of more diversity in a world beset by political uncertainty, and division within countries.

According to the Globe and Mail (May 14), unprecedented numbers of international students are coming to Canadian universities this fall, with some institutions seeing jumps of 25% or more in admission of students from abroad.

Applications from international students were up by double digits this year, with record levels of interest from American students. Many observers had suggested that the election of Donald Trump was a reason.

At the University of Alberta, for example, the percentage of international students who have accepted admission offers has increased 27% from last year. The school has also seen an increase of some 82% in applications from graduate students from abroad.

David Turpin, the university president, says the rising tide of isolationism and exclusion in Europe and in the United States has had people look to Canada. “We will have these incredible students who will be educated in Canada, and in many, many cases go back home and build linkages that are crucial for our future development,” he said. (Globe and Mail, May 14)

Numbers are similar across the country. The University of Toronto, Canada’s top-ranking higher-education institution, has doubled the percentage of American students accept an offer, after it has been recruiting students in the U.S. this past year.  At Queen’s University in Kingston, Ontario, acceptances by international students are up 40%. Even smaller institutions, such as Brock University in St. Catharines, are expecting more than 30% more international students to arrive in the fall term.

This trend is same in Canadian business schools. The University of Toronto’s Rotman School of Management reports a 34% spike in applications from international students, as of March this year, compared with a year ago – although applications from abroad was strong as well last year, up 20% over 2015. (Globe and Mail, March 20)

In contrast, a new survey released in mid-March of 250 U.S. universities and colleges found 39% of respondents reporting a decline in international applications (for all programs, not just business). The survey by the American Association of Collegiate Registrars and Admissions Officers also found 35% recording an increase and 26% seeing no change in demand.

One of the major reasons international students choose Canada as their study destination is Canada’s immigration policies friendly to foreign students. Unlike anti-immigrant policies in the U.S. and Britain that impose study and post-graduation restrictions on foreign students, it is relatively easy to secure a work permit after graduation.  Furthermore, with a three-year work permit, graduates can have time to apply for permanent residency in Canada, as many of them actually do.

Uganda-born Helen Kobusinge, who graduated this spring from Smith School of Business at Queen’s University, now works as a senior accountant for KPMG in Kingston. She says she chose Canada partly for its immigration policies that offer a post-graduation work permit of up to three years for eligible candidates. “This opportunity I found was much better in Canada than other countries,” she said. (Globe and Mail, June 8)

According to new data released recently by the U.S.-based Graduate Management Admission Council, Canada rose to a top-five list of international study destination between 2009 and 2016. Canada moved into second place last year (from fifth in 2009) as a destination for prospective MBA students from Africa – although the U.S. and Britain typically are preferred choices. Over the same period, Canada climbed into third spot (from fifth in 2009) for students from Central and South Asia, and stood fifth last year as a preferred location for prospective students from the U.S. and the Middle East.

Many Canadian schools are taking measures to follow up on growing admissions of international students. David Dunne, director of MBA programs at the University of Victoria’s Gustavson School of Business, says that it is not easy for these students to come and slot into Canadian culture and that schools have the onus to create a supportive environment for foreign students. “At Gustavson, with two-thirds of the MBA class from overseas, the entire cohort participates in a three-week orientation that includes time outdoors, including the woods, to learn about sustainability,” he says, adding that students also meet local First Nation leaders during the orientation.

Some business school officials, however, caution that foreign students’ rising interests in Canadian schools would not last long, unless there are some assurances that studying at Canadian universities, especially business schools, will lead to good job opportunities – not just such university supports for international students, before and after their arrival, including scholarships.

Interests in Canadian universities are increasing fast not just from students but from researchers and scholars who are giving closer look at the research environment and infrastructure in Canada. This is partly due to deteriorating political situations and the research environment in the U.S. and Europe, as in the case of international students looking to Canada, but equally as a result of Canadian universities and local governments’ stepped-up efforts.

Some prominent Canadian universities are in the midst of ambitious internationalization drives, including recruiting globally recognized researchers and professors. At the University of British Columbia, for example, money from an increase in international student fees is targeted toward the creation of the President’s Excellence Chairs Program. Six research areas will see a substantial boost in research heft, with each chair receiving as much as $10 million to $15 million to set up research labs or teams. (Globe and Mail, May 14)

Those positions are in addition to the university responding to inquiries from professors from abroad. “There has been very significant interest from scholars from around the world in moving to UBC,” said Santa Ono, UBC’s president. Faculty members wishing to relocate to Canada have been approaching his university, he says.

The University of Toronto’s computer science department has recruited about 20 new professors over the past two years. Ravin Balakrishnan, the chair of computer science, observes: “Some number of people over the years have always expressed that Canada may be a middle ground between the United States and Europe. We have a lot of the positives of the tech-savvy and energy of the U.S., but some of the safety net of European countries. May be that has been enhanced due to world events.” (Globe and Mail, May14) Research-funding packages and the opportunity to work with other professors at the beginning of their careers have been more important draws in attracting new hires, Dr. Balakrishnan adds.

 

By Yoshikazu Ishizuka, senior consultant, TOCS

Canada kept busy dealing with growing influx of asylum seekers fleeing Trump’s America

The number of asylum seekers crossing the border illegally from the U.S. into Canada has been rising rapidly since the turn of the year, keeping Canadian police and refugee officials busy. During the first two months of 2017, 1,134 asylum seekers were intercepted by Canadian police guarding the borders while crossing over from the U.S. into Canada. The number is already nearly half the total of illegal border crossers arrested during 2016. Most of them have been arrested when they tried to enter Quebec from New York. (Of the total, 677 were caught in Quebec, 161 in Manitoba, 291 in British Columbia and five in Saskatchewan.)

Most of these asylum seekers are fleeing the United States following a crackdown by President Donald Trump on illegal immigrants, migrants and refugees. Janet Dench, executive director of the Montreal-based Canadian Council for Refugees, said Trump’s policies had been a contributing factor to illegal crossings. “Some people who have been coming to Canada have said that they had been in the U.S., had not planned to come to Canada but now feel unsafe in the United States,” she said. (Globe and Mail, March 24)

In the first two months of this year, the federal government dealt with 5,520 claims for asylum, including those asylum seekers from the U.S. who cross the Canadian border illegally on foot, compared with 2,500 in the same time frame in 2016. If this high pace of influx continues, asylum seekers would easily exceed the 2016 total of 23,895 and reach more than 30,000.

It is those asylum seekers from the U.S. that are making the headline almost every day in Canadian media, arousing sympathy of people in the world, who saw images of families, arriving on foot in deep snow and freezing temperature near the border in Quebec and Manitoba, dragging suitcases, to be arrested by RCMP officers for illegally crossing the border and taken to custody.

Especially, moving many Canadians and striking the chord of people in the world were images reported by Canadian media of a young girl, carrying her doll and small suitcase, while her family from Turkey being escorted by RCMP officers as they illegally cross the Canada-U.S. border into Hemmingford, and a man carrying several bags in one hand and his young son in the other as he wades the snowy marshland to illegally cross the border into Canada.

Most of these asylum seekers are those from Muslim-majority countries, or those who have been staying and even working in the U.S. for many years since they smuggled into the U.S. – who fear they might be caught and deported by the Trump administration. In January, Trump issued an executive order that put a temporary ban on allowing refugees into the country, an indefinite ban on refugees from Syria, and a 90-day ban on citizens from Iran, Iraq, Libya, Somalia, Sudan and Yemen. Iraq was removed from the list in the second version of the ban. Refugees from Djibouti and Romania – many of whom are illegal immigrants in the U.S. – are reported to be increasing.

Furthermore, encouraging those illegal border crossers into Canada is the announcement by Canadian Prime Minister Justin Trudeau that his country would welcome those fleeing persecution after Trump issued the executive order.

These asylum seekers make more difficult and dangerous, sometimes deadly, illegal crossing the border on foot into Canada, rather than through the official border crossings, because of the 2004 Canada-U.S. “Safe Third Country Agreement,” under which Canada does not allow foreign refugees claimants who landed in the U.S. through its official border crossings. But if they can physically get onto Canadian soil any way, they will be arrested, detained, released and given an assessment, a hearing and a right to appeal. (Globe and Mail, Feb. 24)

f they are illegal migrants in the U.S., they would immediately be sent back to the U.S. and deported, when they claim refugees in Canada at the official crossings.

Hemmingford, a small town of 800 residents near the border in southern Quebec, directly south of Montreal, is called the “Gateway to Canada.” Most asylum seekers from the U.S. head for the Canadian town by walking down the snowy road surrounded by thick forests from Champlain, northeaster edge of New York State, where they arrive by bus or even by taxi paying exceptionally expensive fare.

Another key entry point for these asylum seekers from the U.S. is Emerson, Manitoba, where they arrive through frigid wilds of Minnesota. There is a community of Somalians in Minneapolis.  In early March, the worst blizzard of the season raged in the area. Some of the asylum seekers were blown off by the snow storm with winds reaching 100km per hour, but, luckily, no one was killed.

Federal officials are stepping up preparations for all scenarios involving the influx of asylum seekers from the U.S. – from a further rise in numbers in coming weeks and months to spring floods that could put migrants at risk in Manitoba.

ublic Safety Minister Ralph Goodale says that contingency planning is continuing, involving RCMP and CBSA (Canada Border Services agency), pointing to the fact that the Red River goes through Emerson, and that the government must be ready for spring floods. He announced in Emerson an additional federal support of $30,000 for the town.

When spring comes, it will become much easier for these illegal asylum seekers to cross the border, while crossing the snowy border on foot in the freezing-cold winter is a dangerous tour for them even though the border is unguarded at most points without fences or walls.

Canada is a country with huge land. It receives as many as 300,000 immigrants annually this year to sustain the economic vitality. In addition, it takes some 40,000 refugees from abroad, through strict security and other reviews. (In 2016, Canada accepted 55,800 refugees, because of the special quota for Syrian refugees.) To allow refugee seekers from the U.S. to stay in Canada, it will cost the federal government considerable additional budget to finance, first controlling the illegal border crossers, and then keeping them for years in Canada until decision on their status is made by authorities.

In towns like Emerson and Hemmingford, many of the communities organize volunteers to help the asylum seekers from the U.S. Some of them even build housing facilities for the asylum seekers. But, these towns’ few ambulances and paramedics are always preoccupied with attending these asylum seekers and townspeople will be left without ambulance services, according to media reports.

As spring nears in these northern regions and problems of refugee seekers’ influx threaten to be prolonged, recent polls show that nearly half of Canadians think that Canada should not let asylum seeker into the country any more. Some 48% respondents said they supported “increasing the deportation of people living in Canada illegally,” according to the Reuters/Ipsos opinion polls taken in early March. Meanwhile 36% supported the federal government policy, saying Ottawa is doing good job about the asylum refugees. However, opposition parties, especially the Conservatives, argue those illegal border crossers make Canada “less safe” and that they should be deported to the U.S. upon being arrested. They say images of asylum seekers illegally walking into Canada, crossing the unguarded 8,900 km long border, give an impression to terrorists that Canada is a country they can easily enter, to put the country’s security at risk.

Prime Minister Trudeau seems to be stubbornly sticking to his policies friendly and compassionate to refugees and asylum seekers. And President Trump does not seem to relax his tough immigration policies soon.

 

By Yoshikazu Ishizuka, Senior Consultant, TOCS

Canada warily awaits President Trump’s debut

Donald Trump was elected the next U.S. President in the November election, defying all predictions and wishes against him. In Canada, which had opposed his presidency long before the election, more vehemently than any country, probably except Mexico, politicians and citizens are equally shocked by Trump’s victory.

Three weeks before the Jan. 20 inauguration, the Trump administration is taking shape as names of people for major White House and Cabinet posts are being announced. While the world is watching anxiously what the Trump presidency would bring to them, Canadian people still seem to be having difficulty to accept Trump’s “surprise” victory – now already two months earlier.

There seemed to be no end of stories in Canadian news media until recently on how President Trump would affect Canada. Some of them are still talking about how unfit Donald Trump is as a (U.S.) president in terms of policies and personal quality. (Back in the U.S., Democrats’ last-ditch efforts to topple the Trump presidency by demanding recounting of votes in some states and attempt to make some of presidential electors’ revolt to Hillary Clinton from the Trump camp all failed.)

Meanwhile, articles are now appearing in media, telling Canadians to play nice with Trump and get along with President Trump’s America as Trump is the president of the neighboring country but not the president of Canada, and it was American people that elected Trump their president and there are nothing Canadians do about this.

David MacNaughton, Trudeau’s ambassador to Washington, tells the Globe and Mail (Dec. 2) “there are plenty of mutually beneficial interests for Mr. Trump and Mr. Trudeau to pursue, despite wildly divergent world views.”

A foreign policy for any country is something like that, and Canadian governments have worked for so long to make relations with the most important, big country south of the border – the United States – as much as predictable with many agreements and arrangements and rules they made. But Donald Trump won the election with the promise to dismantle all those things to restart from the beginning. Trump has vowed not only to withdraw from the yet-to-become-effective 12-country Trans-Pacific Partnership (TPP) treaty but also “repeal or renegotiate” the 22-year-old North American Free Trade Agreement (NAFTA) on the very first day of his presidency to “Make America Great Again.” What would actually happen to these campaign promises is probably the greatest concern for Canada.

Barrie McKenna in his Globe and Mail column (Nov.9) called Trump’s stunning upset over Clinton “a worst-case scenario for Canada’s trade-dependent economy.” Canada is the most trade-dependent among G7 countries.

President Trump is going to promote the most protective agenda since President Nixon. He has threatened to repeal NAFTA and impose 45% and 35% of tariffs, respectively, on China and Mexico. In his “Contract with the American Voter” he proposed during campaign he has vowed to “renegotiate or repeal” NAFTA on the very first day. Repealing the North American free-trade agreement could also result in significantly higher tariffs on Canadian exports entering the United States – the destination for nearly three-quarters of Canada’s merchandise exports.

NAFTA’s demise would be the equivalent of a 10% across the board tariff on U.S.-bound goods and services, according to recent analysis by the EDC. That would send Canadian exports plunging 4.5%, trigger a nearly 4% drop in GDP and cost this country 737,000 jobs, the EDC report says. (Globe and Mail, Nov. 9)

Of course, Canada is not the target of President Trump’s NAFTA and other trade policies, but Mexico is. Whether Canada is Trump’s target or not, Canada would equally suffer as Mexico would if NAFTA is allowed to be dismantled or shaken up to meet the U.S. interests. That’s why Primer Minister Trudeau said immediately after Trump won the election that the Canadian government is ready to renegotiate to make sure Canada will be a party of a new NAFTA. How the Trump administration and the Republican-controlled Congress would like to do with NAFTA is yet to be seen, however.

It is feared that the election of President Trump will also seriously jeopardize the effectiveness of the efforts to slow the global climate change. Candidate Trump had said he would pull the U.S. out of the Paris agreement of the December 2015 United Nations Climate Change Conference (COP21), which President Obama had used his leadership with Prime Minister Trudeau to be concluded.

Prime Minister Trudeau has carefully worked on measures to cut greenhouse gas emissions to meet the Paris agreement, while paying attention to avoiding as much damages as possible to industries. But, should the Trump administration pull out of the Paris agreement, it would become very difficult for the Canadian government to sell its policies to reduce carbon emissions with carbon taxes to greenhouse gas emitters at home. Carbon-intensive industries may find an incentive to move to a jurisdiction with lower environmental controls, if the Trump administration rolls back moves to put a price on carbon in the U.S.

f the largest CO2 emitter does not believe in the climate change, then measures to reduce carbon emissions would become meaningless.

President Trump, however, is not always bad news. The Obama administration delayed and delayed its decision on the approval of the north-south pipeline project, Keystone XL, for six years – and then, for reasons of Democratic Party politics, declined soon after the Liberal Party’s Trudeau took office. But President Trump as candidate made building the Keystone XL pipeline one of 18 points in his “Contract with the American Voter,” vowing to approve it on the first day in the White House.

For the Trudeau government and the Canadian oil industry, the building of Keystone XL – which would send more than 1 million barrels of oil sand crude from Alberta to Gulf area in Texas – would unblock an economic and political logjam. It would mean more Canadian oil flowing to market by the most cost-effective and least politically controversial means possible. That would be a large and unexpected gift for Mr. Trudeau. (Globe and Mail editorial, Nov. 9)

While all other major pipelines under consideration in Canada cross provincial boundaries and native-land claims and all involve troublesome negotiations with the provinces, and with the First Nations, the route of Keystone XL is almost entirely in the U.S. – which means the environmental and political risks are all south of the border. Encouraged or not by Trump’s victory, Prime Minister Trudeau, who had been cautious about the pipeline issue, announced in December his government’s approval of the building of some of controversial pipelines in Canada.

Very wisely, liberal and outspoken Trudeau did not criticize Candidate Trump during the campaign, in sharp contrast with Ontario Premier Kathleen Wynne and other politicians, who denounced Trump for his misogyny and discriminatory remarks against minorities, and in some cases, overtly racist messages. Trudeau, who says he may be able to get along with President Trump, may be able to build a new “special relationship” with Trump’s America. Some Canadian media are talking about such optimistic expectations.

Once upon a time, Pierre Elliott Trudeau, Justin Trudeau’s father and one of the greatest Canadian prime ministers, said that living next to the United States was like sleeping with an elephant: Even if the beast is friendly and even-tempered, his enormous bulk means that Canada is affected by every twitch and grunt. (Globe and Mail editorial, Nov. 11) Canada has not many choices but play nicely with the new elephant, whether it is friendly, even-tempered and predictable, or not.

 

Yoshikazu Ishizuka, Senior Consultant, TOCS

Liberal government allowing more immigrants to come to Canada; Over 300,000 newcomers landed in past year, highest since 1971

Canada is known as a multi-ethnic, multi-culture country friendly to newcomers. Even during the past 10 years of the Conservative rule, new immigrants were arriving in Canada constantly every year. Immigrants have been increasing rapidly since the Liberal Party took power a year ago. When antipathy is rising toward immigrants in the U.S., Britain and many other countries — as shown by the Donald Trump phenomenon and Brexit — Canada is increasing the immigration target for years to come, and even relaxing regulations on incoming temporary foreign workers is being discussed.

According to the latest Statics Canada report of its annual population count, in the past year to July, 320,932 immigrants landed in the country, the largest annual number since at least July 1971, when comparable records started. That is a steep 33.3% increase over the previous 12 months, the fastest growth in nearly three decades. In 2015, 240,844 immigrants came to Canada.

These immigrants include Syrian refugees, who began arriving in Canada in November 2015 as Prime Minister Justin Trudeau’s promise during the campaign. At last count, Canada had welcomed 30,862 refugees, with thousands more still to be processed.

Statics Canada says that Canada had not received such a large number of immigrants in a single annual period since the early 1910s during the settlement of Western Canada. The country’s population subsequently rose 1.2% in the year to 36.3 million (preliminary estimates), or an increase of 437,815 people – the biggest gain since 1988-89.

Despite such sharp increases in the past year, Immigration Minister John McCallum has said he wants to boost immigration levels substantially in the coming years to help alleviate the demographic challenges of an aging population. The government’s immigration target was about 300,000 immigrants, a jump from 240,844 immigrants in 2015. McCallum said that Canadians support higher levels, adding that he would expand the temporary foreign-worker program so that more temporary foreign workers can come to work in Canada.

(In fact, aging of Canada’s population has been progressing fast, if not so fast as Japan’s. A record number of Canadians — six million — were at least 65 years of age as of July 1, compared with 5.8 million children. By comparison, in 1986, there were twice as many children as people who were 65 and older. Immigration is a critically important policy measure to sustain Canada’s economic growth.)

However, the federal government’s own internal polling has shown that most Canadians are satisfied with current levels (which, at the time of the poll, were around 250,000). In a Nanos Research survey conducted for The Globe and Mail in August, 39% of respondents said the government should accept fewer immigrants in 2017 than this year, while 37% said the country should receive the same amount in 2017. Only 16% said the target should be increased – although two out of every three respondents support the government plan to accept more refugees. (Globe and Mail, Sept. 28, others)

With the 2017 immigration plan set to be announced in November, Canadian news media are asking in their editorials and opinion pieces whether the country needs more immigrants. (Globe and Mail, Sept. 20)

Politicians have also been alarmed. Not only Conservatives, who are generally cautious and reluctant toward immigrants – and often against or even anti-immigration – but also some Liberals, who are usually more open to immigrants and foreign workers, began expressing their concerns over and even opposition to the government’s immigration plan. Canadians worry that, in an uneasy economy, new immigrants might take their jobs, if the pace of newcomers landing in the country continues accelerating. Liberal politicians from such constituencies, as well as conservative citizens and politicians who worry Canadian tradition and values may be undermined by the immigrants’ big inflow, are cautioning about the fast expanding immigration.

Against such a backdrop, Kellie Leitch, the Conservative MP and candidate for her party’s leadership, caused a stir recently when she e-mailed supporters with a questionnaire asking them whether the federal government should screen potential immigrants for “anti-Canadian values.”  (Globe and Mail, Sept. 4)

Ms. Leitch was immediately criticized by her peers and media for proposing “a value test for immigrants” and “playing identity politics.” Her proposal ng smacks xenophobic, anti-immigration and racist, upset colleagues said.  “What Ms. Leitch is toying with — a government that tells people what to believe and how to think — is itself anti-Canadian,” the Globe and Mail editorial (Sept. 4) said.

Conservative interim leader Rona Ambrose, as well as one of Leitch’s opponents in the leadership race, slated for next May, MP Michael Chong criticized Ms. Leitch’s proposal as being outrageous. Mr. Chong called it “dog-whistle politics,” the kind of messaging meant to prick up the ears of those who fear immigrants will become the enemy within. Some suggested that it reminds people of U.S. Republican presidential candidate Donald Trump’s proposal of “extreme vetting” for would-be immigrants to undergo. Another Conservative leadership candidate Maxime Bernier offered a reasonable criticism, saying “the best way to promote Canadian values is to provide new immigrants with economic opportunities to help them integrate into society.”

The harshest words have come from former Conservative leader and Prime Minister Stephen Harper’s former policy director Rachel Curran. She called Ms. Leitch’s proposal “really dangerous politics” and “actually a pretty Orwellian path.”

Canadian media pointed out that it was not the first time Ms. Leitch proposed such fear-mongering identity-politics tactics. They reminded readers of her role during the 2015 federal election campaign in promoting the Conservative Party’s disastrous proposal for a “tip line” for reporting “barbaric cultural practice” — which alienated even Conservative supporters for the police-state tone the proposal gave. Worse, the Conservative Party’s campaign also included a proposed ban on the niqab, a face covering worn by some Muslim women, during citizenship ceremonies. These political gaffes rescued Justin Trudeau’s Liberal Party, which had been badly trailing in the campaign, boosting it to the October victory.

Conservative politicians have been so upset by Ms. Leitch’s proposal and trying to neutralize its effects so desperately because they fear that her “anti-immigration” proposal could shatter to pieces their somewhat successful efforts over years to improve the image of their party as an “anti-immigration” or at least “immigrant-unfriendly” party. In order to win in the next general election in 2019, any party needs to win support of immigrants and their children, and new immigrants’ support is especially important, as four out of 10 Canadians are now immigrants and their children today.

The federal government’s 2017 immigration plan on how many newcomers Canada will welcome is to be announced in November. The Trudeau government is also considering possibility of relaxed rules for temporary foreign workers to make it easier for companies to hire them — sometimes at ordinary Canadian workers’ cost — and allow those temporary workers to become permanent workers after the four years of stay. A “season of immigration politics” is now here.

 

By Yoshikazu Ishizuka, Senior Consultant, TOCS

‘The Sophie Effect’ on Canada’s fashion industry

Justin Trudeau has been enjoying still rising his popularity since he took office as Canada’s Liberal prime minister 10 months ago. Equally popular is his charming wife, Sophie Gregoire Trudeau, former television personality, journalist, activist working for various causes, and 41-year-old mother of three.

Soon after she became the Canadian prime minister’s wife, the term “Sophie effect” has been the talk of the town. Wherever she goes she always draws lot of Canadian media’s attention to what she wears – which Canadian designers’ clothes, shoes and bags. She has said in public that she wants to play roles to promote Canadian designers on the world stage when she accompanies her prime minister husband on foreign trips. And her efforts are already generating great impacts. The Canadian fashion industry and media are calling it “the Sophie effect.”

A photo of Sophie Gregoire in a white coat, waving to supporters along the Ottawa street, while walking with her husband to Rideau Hall for the government’s swearing–in ceremony last November caught almost all Canadians’ eyes. Many people of the world saw the same scene as news media carried it across the world on front pages or in video feeds.

The white coat she wore was an elegant baby alpaca coat made by Sentaler, a luxury outerwear company founded in Toronto in 2009. “The effect on the brand was immediate…. From being a relatively unknown brand sold at Holt Renfrew, Sentaler was the Canadian fashion label that suddenly everyone was talking about. And wanting.” (Globe and Mail, July 14) The white coat, later dubbed “Sophie Gregoire white coat” increased in sales by 400%, according to Bojana Sentaler, the designer and creative director of Sentaler, 31-year-old Belgrade native. The Sophie effect only increased after Sophiie Gregoire again wore Sentaler at four other high-profile outings, including a meeting with the Queen at Buckingham Palace.

Her efforts at the cause to raise the international recognition of Canadian fashion brands seem to have won broad-ranging and enthusiastic support. The Toronto Star (July 26) said “Sophie Gregoire Trudeau has achieved ‘fashion icon’ status during her ascent into the spotlight, and has many applauding her for wearing Canadian designers,” while the National Post (May 27) quoted Elle AyoubZadeh, owner of the Toronto shoe line Zvelle, as praising her as “Sophie is Canada’s style icon.”

When it was widely reported that many of what Sophie Gregoire wore to showcase Canadian design during her overseas trips were the designers’ gifts and loans, one activist group “Democracy Watch” criticized her for accepting fashion gifts and loans, instead of buying them. It soon became a dead issue, however, as most Canadians rallied behind her as those items fall within Canadian conflict of interest guidelines.

There is a whole list of examples of “the Sophie effect.” One of the most important, big occasions was during the Trudeaus’ state visit to Washington in March at President Barack Obama’s official invitation. Canadian and U.S. media played up pictures of Sophie Gregoire being meticulously styles head-to-toe in Canadian designers at the airport, the welcoming ceremony and the White House state dinner – which were viewed by audiences not only in the two countries but throughout the world, including Japan.

Among those Canadian designs were: a gray two-piece DUY suit by Montreal-based Vietnamese-Canadian designer Duy Nguen, worn upon her arrival at Andrews Air Force Base; a Lucian Matis dress at the arrival ceremony at the White House and a gown also by Lucian Matis, Romanian immigrant-turned Torontonian designer, at the state dinner; and a Toronto designer Ellie Mae’s botanical pattern jacket, to name just a few. In addition, shoes, bags, earrings and rings and other accessories – all by Canadian up-and-coming designers, many of them obscure, little-known brands outside Canada.

When Prime Minister Trudeau and his wife visited Tokyo and Ise on their first official visit to Japan for the G7 Ise-Shima summit in May, Japanese media literally followed them wherever they went, especially reporting about fashions Sophie Gregoire were wearing. There has been great public interest in her outfits in Tokyo, an epicenter for fashion and a vital market for up-and-coming Canadian designers, according to Montrealer Jessica Mulroney, Sophie Gregoire’s friend and stylist.

The “Sophie effect” was felt back in Canada as soon as Sophie Gregoire stepped off the plane at Haneda airport. Within 24 hours, there were growing inquiries about the bag she was wearing on the red carpet at the airport alongside her husband – Montreal luxury bag brand WANT Les Essentials (Incidentally, popularity of the brand has been rising in Japan, too.) When Sophie Gregoire joined Japan’s Prime Minister Shinzo Abe and his wife Akie at a cocktail event in Kashikojima, the venue of the G7 summit, her metallic gold shoes made quite an impression. Within hours, the Canadian-designed high heels the “Ava” of the Zelle brand had a lengthy pre-order list, according to the National Post (May 27). Sophie Gregoire wore the Zelle heels when she was pictured chatting with the Empress at the Imperial Palace earlier in the week.

These images easily spread through social media and digital media nowadays as people tweet and put them on their Facebook accounts or via smartphones even if traditional news media should fail to publish. And when people access these Canadian fashion designers’ web sites, pictures of Sophie Gregoire donning their clothes or accessories pop up on the top pages of their web sites.

Dr. Ben Barry, an associate professor at Ryerson University’s School of Fashion in Toronto, praises Sophie Gregoire’s roles highly, saying that her support is enormously important to a designer’s brand recognition. He told the National Post (May 27) that many Canadian fashion designers are enjoying the hard-to-get exposure she is giving them by wearing their designs on her trips abroad. A lot of emerging Canadian fashion designers are small businesses relative to their U.S. and British counterparts, and are working with small marketing budgets, Barry said.

Interesting to note is that, in addition to “putting Canadian designers on the map,” as Barry pointed out to the National Post, Sophie Gregoier’s style choices are “just as political as they are fashionable.” “It’s important to look at who she is wearing, and the fact that she’s selected brands that are from emerging Canadian designers, Canadian designers that are very multicultural and designers that weren’t born to Canada but immigrated … that sends a very strong message internationally.” The white Sentaler coat Sophie Gregoire wore for the Trudeau Cabinet’s swearing-in ceremony, for example, met many of these criteria, and in addition to the creator of the coat, Ms. Sentaler, being an emerging Belgrade-immigrant Torontonian designer, the alpaca coat is “hypoallergenic, eco-friendly and animal-friendly” – some of the values the modern Canadian society attaches importance – according to Ms. Sentaler who spoke to the Globe and Mail (July 14). The cruelty-free shearing of the alpaca is guaranteed by the Peruvian government, she said.

“These clothes promote ideas of who is Canadian, what it means to be Canadian, and the values that Canada represents,” Jessica Mulroney says. As the “Sophie effect” is being talked about, her roles as Sophie Gregoire’s style adviser, advising her on what to wear as the Sophie effect creator, have drawn attention of more Canadians. But she has said that she doesn’t tell Sophie Gregoire what to wear. “I’m not Sophie’s stylist but we’re working together to make sure that we can represent Canadian designers so that everybody gets a chance. (I’m) A fashion strategist, maybe.” (Globe and Mail, March 1)

By Yoshikazu Ishizuka, Senior Consultant, TOCS

Will ‘President Trump’ get more Americans moving to Canada?

With two weeks to go before the U.S. Republican National Convention opens in Cleveland, Ohio, it is almost certain that the controversial, divisive real estate tycoon Donald Trump will be nominated as he party’s presidential candidate.

Trump has enraged Americans and their neighbors and worried allies and even alienated his Republican colleagues with his outspoken, coarse statements – that he would build walls along the border to stop Mexican immigrants and drugs from coming into the U.S. and “arm-twist” Mexico to pay for the walls, that he would repatriate all illegal immigrants in the U.S., and that he would ban Muslims from entering the country. By inflaming populism and nationalism among Americans discontent with their situations, he has won their support, but at the same time caused fears among ordinary Americans, and even political leaders and news media in Asia and Europe about Trump’s racist and anti-immigration rhetoric.

He has openly spoken derogatory words about women, talked in favor of protectionism against the NAFTA and the just agreed-on TPP free trade deals, and threatened isolationism to withdraw U.S. troops from its allies in Asia and Europe, including Japan – unless they pay more or all costs for keeping the troops there. Coupled with his crudeness, these ideas of “America First” and “Make America Great Again” – Trumpism – have made as many Trump-phobes as many supporters he won – making more Americans threaten to move to Canada if a Trump presidency becomes more real as his nomination as the Republican candidate becomes certain.

Anti-Trumpism has crossed the border to the north and is spreading in Canada. What Trump talks about never fits what the traditional Canadian values, represent such as multiculturalism, especially in Canada after Liberal leader Justin Trudeau came to power. Prime Minister Trudeau has carefully and wisely avoided directly commenting on the Republican candidate. But Ontario Premier Kathleen Wynne (she is a staunch Liberal, as Trudeau) made one of the harshest attacks by a foreign political leader last month (though without naming his name) while visiting Washington. She said, “A candidate who is as misogynist as the Republican nominee, who is blindly protectionist and seems to be uninterested in global collaboration and cooperation would be a very difficult challenge for Ontario and Canada to deal with,” and warned his election as U.S. president would be dangerous for the world. (Globe and Mail, June 16)

Trump on his part, however, has been so far less mean to Canada. In a televised debate in late February, answering a moderator’s question, he said the northern wall is unnecessary, because “it is not our biggest problem,” and because “it would be too long and expensive.” (Globe and Mail, Feb. 26)

As BBC News (May 17) reported, Google searches for “how can I move to Canada” spiked after Trump won seven out of 11 primaries during “Super Tuesday” (March 1), according to the search engine’s data editor Simon Rogers.

Immigration lawyers in Vancouver told the Globe and Mail that their phones started ringing and their e-mail inboxes started filling with requests for information on how to move to Canada after Trump’s primary wins on Super Tuesday. Immigration lawyer Rudolf Kischer said his firm typically gets a call or two per day from Americans looking to move to Canada, but between that Tuesday and Wednesday, the number took a significant jump. (Globe and Mail, March 2) Media reports say the number further increased after Trump won the Indiana primary on May 3 and it appeared almost certain that he will garner 1,237 delegates necessary to win the nomination.

Canada is responding to these rising “move to Canada” calls with various offerings. As early as in February, when Trump already was looking unstoppable in early stages of campaign, a radio DJ Rob Calabrese set up a website to attract those dissatisfied Americans to the Canadian island of Cape Breton, Nova Scotia. The website, “Cape Breton If Donald Trump Wins” was visited by “over one million people.” (BBC News, May 17)

“Don’t wait until Donald Trump is elected president to find somewhere else to live. Start now, that way, on election day, you just hop on a bus to start your new life in Cape Breton, where women can get abortions, Muslim people can roam freely, and the only ‘walls’ are holding up the roofs of our extremely affordable houses,” the website copy goes. (Huffington Post Canada, Feb. 16)

A Kitchener, Ontario, startup called Sortable also launched a hiring campaign on Facebook and Instagram urging expats to come back to Canada – and American engineers to come work at the company to escape the Trump – if Trump becomes president. The job ad, which features a grimacing Trump, asks: “Thinking of Moving to Canada? Sortable is Hiring.” (Canadian Press in Yahoo News, June 15)

Even a new dating website got in on the anti-Trump sentiment by offering to pair Americans with Canadian singles. The website, MapleMatch.com promises to save Americans from “the unfathomable horror of a Trump presidency” and “make dating great again,” a pun for Trump’s signature slogan “Make America Great Again!” (Canadian Press, BBC News)

Some major Canadian companies also are trying to cash in on so-called anti-Trumpism in the U.S. Air Canada launched a campaign in June in five large U.S. cities urging Americans to “test drive” Canada with a visit before moving to Canada post-election should Trump succeed in his bid for the White House.

“Before you sell your house and book a one-way ticket, maybe it makes sense to check us out first,” urges a cheery flight attendant in the ad, pointing out that Air Canada operates 240 flights between Canada and the U.S. each day. (Canadian Press, June 15)

Will the rise of these anti-Trump sentiments really make more Americans to Canada? Most Canadians, professionals, media and businesses are generally cool to that expectation.

It’s not new that in presidential election years, Americans dissatisfied or terrified by a potential new president threaten they would move to Canada. According to the BBC article, “the number of U.S. citizens permanently moving to Canada has been relatively stable around 9,000 since 2005. There was a slight peak in 2008 – the year President Barack Obama was elected – although the reasons why people left America [are] unknown.”

Americans threatening to move to Canada are not necessarily only Trump-haters. According to a poll conducted by Canada’s Global News with Ipsos, a global market research company, suggested that 19% of Americans would head to Canada if Trump won and it also found that 15% would leave if Hillary Clinton became president. But similar sentiments in previous elections haven’t materialized, according to BBC News. (May 17)

Globe and Mail (March 2) says that moving to Canada permanently is not as easy to any American citizen as it may appear. It quotes the Vancouver immigration lawyer Kischer as pointing out that immigration laws were tightened under the Conservative Harper government. “You had to be educated, you had to have a degree. Now you need to have an actual employer that can show that they can’t find an actual Canadian for the job,” Kischer told Globe and Mail. On top of tighter requirements, he said, the time it takes to move and the potential costs may also make it more difficult. “Mobility to Canada is really going to be for those who can afford it,” he said. (Globe and Mail, March 2)

 

By Yoshikazu Ishizuka, Senior Consultant, TOCS

Justin Trudeau’s first visit to Japan – a “holiday in Tokyo”

Canadian Prime Minister Justin Trudeau visit Japan last week for bilateral talks with his counterpart, Shinzo Abe, and Group of Seven summit in Ise-Shima, western Japan – his first ever visit to Japan and a full debut before the leaders of Canada’s advanced Western partners since taking office last fall.

Trudeau is the newest-comer among the G7 leaders, but enjoyed more media attention, at least outside the G7 conference, during his week-long visit. Japanese media covered his and his wife’s favorably, playing up the couple’s visits to the Meiji Shrine and the Imperial Palace and their “holiday in Tokyo.”

Soon arriving in Tokyo on Monday, May 23, with Sophie Gregoire, many days ahead of the other G7 leaders, Trudeau began making his investment pitch to Japanese automakers. He personally invited presidents of three major automakers – Toyota, Honda and Fuji Heavy Industries, the firm that makes Subaru – as well as top executives of auto part manufacturers to invest more in Canada.

The main target of his pitch was Fuji Heavy. He invited CEO Yasuyuki Yoshinaga to the official residence of Canada’s ambassador to Japan to encourage the automaker to invest and produce Subaru cars in Canada. Unlike Toyota and Honda, Fuji Heavy does not have an operation in Canada.

Yoshinaga told Trudeau very politely in a Japanese manner that he doesn’t have any plans to expand capacity in the near term, though he might in the future, according to the prime minister’s press secretary Cameron Ahmad. (Canadian Press in CBC News, May 24) Although with no commitment from Yoshinaga, it was a good first step toward bringing the Subaru maker into Canada. Trudeau tweeted that it was a productive meeting, though.

Canadian newspapers showed a photo of Trudeau being greeted by Honda Robot “Asimo” at Honda’s head office near the Canadian Embassy. He apparently liked it. “Diplomatic protocol at @Honda is unique,” the prime minister said on Twitter in describing his encounter with the humanoid robot.

Ontario, Canada, is home to assembly plants of five major automakers – Chrysler, General Motors and Ford, in addition to Toyota and Honda – as well as plants of many auto parts suppliers, forming one of the largest automotive industry cluster in North America.

Honda opened its assembly plant in Alliston, Ontario, in 1986 as the first plant by a Japanese carmaker; in 1998 it build a second plant and an engine plant in 2008, to make the Alliston facilities the main hub for overseas production of Honda’s best-selling Honda Civic. Last November, Honda announced it would invest $857 million for future production of the next Civic model.

Toyota also announced last year that it would invest $421 million for its Ontario plants in Cambridge and Woodstock to prepare for the near-future production of the next-generation Lexus model.

Toyota and Honda are rather exceptional cases, however. Investment in new North American plants has bypassed Canada this recent decade in favor of Mexico and the southern United States and even spending in existing factories has been lower in recent years than in previous decades, as the Globe and Mail reports in Greg Keenan’s article May 24.

Fuji Heavy, or Subaru, has only one vehicle-making factory in North America. Its sales in the U.S. market have doubled since 2010 to a record 582,675 in 2015. Canadian sales also soared by 68% to hit a record high of 46,609 last year. Although its plant in Lafayette, Ind., is already undergoing a US$140-million expansion that is designed to increase production to more than 300,000 vehicles annually, Subaru is a strong candidate to add even more North American capacity, according to industry analysts and officials. (Globe and Mail, May 24)

For Trudeau, meetings with Japanese auto executives may be more important in terms of domestic politics to appeal to Canadian voters and media as the prime minister working for Canada’s interest even outside the country – more appealing than his talks with his counterpart Abe or meetings with the leaders of the G7 economies.

Early in the morning, on May 24, Trudeau and his wife visited Meiji Shrine to “pay respect for Japan.” They were greeted by Shinto priests and led into the inner shrine, where they bowed deeply and sipped sacred sake before the shrine. Later they handwrote messages on “ema,” or wooden plaque to write prayer for the Gods and dedicated them where scores of such “ema” are hung. Trudeau wrote “May the great friendship Canada and Japan share benefit the people of our countries – and of the world – in the years to come.” His wife Sophie Gregoire wrote in French: “Courage, love, light and peace.” Before leaving the shrine, the couple hugged several Canadian tourists and told them, “It’s been going great. There is a deep friendship to grow on.” (National Post, May 24)

Then the couple visited the Imperial Place for audience with the Emperor and the Empress to enjoy conversation. Trudeau attended an official welcoming ceremony at the Prime Minister’s Official Residence, reviewing the guard of honor, before plunging into bilateral talks with Abe, with whom Trudeau had met already three times since last fall – at APEC and G20 meetings in November, and the Nuclear Security Summit in Washington late March.

At their bilateral talks, Trudeau stressed the importance of his policy to boost infrastructure spending to stimulate economic growth, even allowing budget deficits – which was endorsed by Abe, who has been struggling to lift the Japanese economy out of the long deflation through fiscal measures as well as bold financial policies and structural reforms. On the other hand, as Canadian media reported, Trudeau did not agree to Abe’s preaches on how China’s behaviors in the South China Sea and the East China Sea are threatening the stability of the region, for fear of harming Canada’s economic and trade relations with China.  Columnist Mathew Fisher pointed out that Japan’s trade with China is nevertheless much larger than Canada’s trade with China. (National Post, May 24) Fisher said in another column (May 27) that Canada’s position on the China issue is causing concern in Tokyo and Washington but that “[Trudeau] is trying to play ball” with the U.S. and Japan in their hardline policy on handling China. How it will evolve after Trudeau’s visit to Japan on its China policy – change or no change – is interesting to watch.

Living up to the tradition and traits of his father and former prime minister, Pierre Elliot Trudeau, Trudeau Junior surprised Canadians, and angered many conservative critics at home, the next day when he took a full day off, with no meetings and no work, to celebrate the 11th anniversary of wedding with Sophie Gregoire, three days ahead. They stayed at a traditional Japanese ryokan. Local TV stations ran photos of the couple in T-shirts taking a walk.

“The fact of the matter is we’ve been working extremely hard today and will be at the G7 meetings on Thursday and Friday, and in the middle of all this, I’m taking a moment to celebrate – on personal funds – my wedding anniversary with my wife. This is the kind of work-life balance that I’ve often talked about as being essential in order to be able to be in service of the country with all one’s very best and that’s certainly something I’m going to continue to make sure we do,” Trudeau told reporters. (CBC News, May 25)

This caused a sort of furor and outcry of criticism back in Canada, from critics and Conservative politicians. “It’s outrageous for Trudeau to take a day off in Japan when he is supposed to be working had for Canada’s interest wasting taxpayer’s money” was the main point of their angry message. However, according to CBC, Trudeau’s “holiday in Tokyo” could also be seen as part of a calculated strategy on his part to deliberately provoke discussion on an issue that resonates with many Canadians and could score him a few political points in the process. During the election campaign last year, Trudeau proposed more flexible work hours and new parental leave options. And just recently, his Liberal government announced it was looking into implementing flexible work hours for federally regulated workers in some sectors, such as banking, broadcasting and transportation.

The car carrying Trudeau to the bridge before the Grand Shines of Ise received big cheers, probably most enthusiastic, loudest and warmest, from well-wishers along the streets to greet the leaders of the G7 countries, Japanese TV stations reported. It was Justin Trudeau’s good debut to Japanese people – a debut typical to Trudeau tradition. I hope he (and his wife) enjoyed a holiday in Japan.

 

By Yoshikazu Ishizuka, TOCS senior consultant

Serious delays of new sleek streetcar delivery hit Toronto transit renewal

The streetcar system of Toronto, Canada’s biggest city, is the largest such system in the Americas in terms of ridership, number of cars and track length, as Wikipedia describes. It is one of the few existing streetcar systems with its history dating back to the mid-19th century – 1861 – when a horse-drawn street railway began.

This Toronto streetcar system is now adding a new prize – a fleet of 204 21st-century, low-floor, safer and more comfortable, accessible streetcars to be manufactured by Montreal-based Bombardier and put into service completely by the end of 2019.

However, there are so far only 17 of such light rail vehicles – painted in red of the Canadian flag with broad white lines on the top and bottom of the vehicle body – in service in Toronto streets as of April. If everything went well as Bombardier has promised in the contract, more than four times the current number of new sleek streetcars should have been in service, carrying an average of over 290,000 citizens daily – including commuters, students and shoppers – on a more comfortable ride in bigger space.

The Toronto Transit Commission (TTC) ordered 204 new light rail vehicles to put in service in its streetcar system, gradually replacing old models, to complete the renewal plan by the end of 2019 in a C$1.25 billion contact concluded in 2009 with the railway division of the world’s third largest commercial aircraft maker based in Montreal.

In the original plan, Bombardier was obliged to deliver 73 streetcars to the TTC by the end of 2015, but only a meager 14 such streetcars. Three more were delivered after January this year, making only 17 vehicles.

In response to angry protests and criticisms from the TTC, Toronto city officials, riders and citizens, Bombardier announced a downward revised delivery plan in late April, which is further below the delivery target promised in the downward-revised plan announced earlier this year. The Toronto mayor and the TTC CEO were all “outraged” and decided to file a damage suit against Bombardier.

In the latest announcement on April 25, Bombardier promised to “significantly accelerate” manufacturing of the ordered light rail vehicles and deliver 30 such vehicles to the TTC by the end of 2016. This means that the company will produce 13 more vehicles during the remaining eight months – fewer than two vehicles a month – as already 17 vehicles have been delivered. This is an appallingly slow pace, in view of the serious delivery delay of almost by a year.

Just a month earlier, after having been nudged by the TTC and the Toronto city, Bombardier had promised to produced and supply four streetcars per month to make the delivery total to 54 by the end of this year – though still far below the original plan of 73 vehicles to be delivered by the end of 2015. No wonder that almost Torotonians – riders and tax payers included – not only transit officials are all angry at Bombardier’s failure.

In coping with the serious delivery delays, the TTC has been refurbishing more than 200 old streetcars that had been planned to be replaced by new vehicles and conducting additional maintenance of the old streetcars, or in some routes, adding new bus service, to maintain service level for riders, causing lot of extra expenses. Riders have also to endure traveling in old jammed streetcars to commute when they would be able to enjoy more comfortable riding in new specious vehicles.

The TTC finally filed a damage suit against Bombardier, but according to terms in the contract, the damages would be paid only up to 5% of the contract, which means C$51 million at most – if the court ruled in favor of the TTC. This amount seems not enough to cover all expenses made necessary for the extra maintenance and refurbishing works to keep its service level.

Bombardier on its part took some remedial action. It appointed a new president of transportation for the Americas and decided to “use a second manufacturing plant in La Pocatiere, Quebec, along with an additional assembly line in an unspecified location to help with production that is currently being completed in Thunder Bay, Ontario – to accelerate the pace of delivery of the TTC light rail vehicle project.” (Toronto Star, April 25)

The company explains that some of the causes for the delays – problems with faulty parts shipped from the company’s Mexican plant, and quality control issues – will be solved by producing those parts at La Pocatiere plant.

With all these and other remedial measures, as well as the leadership change, Bombardier says it will be able to fulfill its promise of delivering all 204 streetcars ordered by the end of 2019. But, thinking of Bombardier’s “track record” thus far, no one seems to be taking the word seriously. In fact, the Globe and Mail reported: “If the company does get a total of only about 30 vehicles to Toronto by the end of the year, it will have to produce more than one a week from then through 2019.”

Both TTC chair Josh Colle and chief executive Andy Byford are openly doubtful about Bombardier managing to fulfill its promises, saying they would believe it when they see it. “We’re outraged about this,” Byford said.

Toronto Mayor John Tory also said he was frustrated with Bombardier’s inability to fulfill its contract. “Suffice it to say, I am completely dismayed at this. It is, you know, no way to do business.” (Globe and Mail, April 25)

These delivery delays for the TTC streetcar project also are threatening to affect unfavorably the new light-rail projects by Metrolinx, regional transit system between Greater Toronto Area and Hamilton area in Ontario. According to the Globe and Mail (April 26), there is increasing alarm at Metrolinx that the timeline to open two new Toronto transit lines in 2021 could be threatened by delays getting vehicles delivered. Metrolinx placed a C$770-million order for 182 light rail vehicles, but a prototype vehicle that was supposed to be delivered last year by Bombardier has not arrived.

As major Canadian media point out, Bombardier’s reputation in the country’s biggest city is being already undermined badly by this delivery problem, when Bombardier is seeking US$1-billion in federal support for its aerospace division, particularly its next-generation C-Series jet program.

The Toronto Star in its editorial (April 26) stressed that Bombardier’s argument that “a streetcar project have little to do with an ambitious airplane program” would not work, and said: “The link is credibility. If Bombardier blows through its promises on streetcars with such regularity, how can it be trusted to live up to whatever airplane deal it eventually strikes with Ottawa?”

(A latest news report said that Bombardier announced on May 2 that Delta Air Lines has concluded a formal contract to buy 125 CS100 jets – the largest contract Bombardier has won. Canada Air placed an order of 75 CS300 jets in February. Good news for troubled Bombardier, which had no order for its CS-series planes last year. Good news, if it can deliver the ordered planes.)

 

By Yoshikazu Ishizuka, TOCS senior consultant

Canada moving toward marijuana legalization

Canada is moving toward legalization of recreational marijuana, which the Liberal Party has promised in last year’s election.

There are many problems that must be cleared for legislation to be written for legalization, and everybody understands that recreational marijuana will not become available overnight to buy freely at stores. Still a sense of expectation is growing among Canadians and marijuana producers as if legalization of cannabis would happen any time soon.

When Justin Trudeau’s Liberal Party defeated the Conservative Party in the October election, stock prices of marijuana-related companies shot up, as much as by 7 % on the TSX Venture Exchange.

Immediately after taking office, Prime Minister instructed his Cabinet and Party to start studying how to proceed to make good on his campaign promise to legalize marijuana, naming Bill Blair, MP and former Toronto Police chief, as a parliamentary secretary to the minister of justice, responsible for working out the best model to legally distribute the drug for recreational purposes to adults, while finding ways to keep it out of the hands of children. Blair will have to tackle difficult problems on where to sell – dispensaries, pharmacies, or liquor stores – and who can grow the grass, how to regulate, and how to tax, to name just a few. Some of the biggest concerns are how to keep the drug from children’s access, and how to prevent the money from sale of recreational marijuana from flowing into the hands of criminal groups.

The Canadian media which were running stories suggesting as if marijuana would be legalized soon are now more low-key and reporting more about problems to be cleared. There are talks that it would take at least two years, or in the worst-scenario case, four years until the next general election.

Still expectations are rising for complete legalization of marijuana. According to the recent opinion polls, legalizing marijuana is supported or somewhat supported by a strong majority of 68%. By province, British Columbia leads the way with 75% overall support for legalization. On the other hand, 30% of the population is opposed or somewhat opposed to the legalization of marijuana.  (Globe and Mail, February 29)

The polls of 1,000 Canadians, conducted by Globe and Mail and Nanos Research, also found that Canadians would prefer that cannabis be sold in dedicated dispensaries (44%) or pharmacies (43%) than through regulated liquor stores (36%), which is preferred choice of Ontario Premier Kathleen Wynne.  Only 3.2% preferred convenience stores. Of course, neither Blair nor the Health Minister would comment about their preferred choice.

Use of marijuana for medical purposes became legal in 2001 under the Conservative government in Canada, and Canada is home to 50,000 licensed medical marijuana users and 26licensed producers, all of whom are regulated by Health Canada. (Globe and Mail, January 5) Under the Liberal government, which has promised to legalize recreational marijuana, those figures are expected to grow. Even under the current system that makes recreational marijuana illegal, “there are about 500,000 medical-cannabis users in Canada over the age of 25, according to Health Canada. The number has skyrocketed in recent years – because anyone complaining of the slightest bit of pain can get a prescription. Walk into some of the storefront marijuana dispensaries in Vancouver and you don’t even need that.” (Globe and Mail, February 26)

Canadians today can get marijuana legally for medical purposes at licensed dispensaries, if you have a prescription. The size of this medical-marijuana market is estimated at C$80 million to C$100 million. But when recreational marijuana is legalized, the market could expand to C$2 billion to C$5 billion. That’s why pharmacies’ and liquor stores’ industries are already lobbying so hard for slices of the lucrative market.

When the Conservative government legalized medical cannabis, Canadians with authorization from a physician could grow their own cannabis plants or designate someone to do so for them. Under that program, the number of production licenses went from fewer than 500 in 2002 to more than 22,000 by 2012. (Globe and Mail, February 26)

Alarmed by the pace of proliferation of both users and growers, the Harper government decided to change the rules. Under the new plan, the number of growers was restricted and their operations more tightly controlled. Products had to be ordered online. Costs for users became prohibitive to ordinary users, until finally a disgruntled group of users won a court injunction against the new structure in mid-February.  (ibid.)

As a result, both the old and new systems were allowed to operate concurrently, creating a mess. In the absence of any government leadership, dispensaries started popping up in Vancouver, almost in defiance of Ottawa, as Globe and Mail describe it – both licensed by Vancouver’s local authority, and not legal. Doctors who were unwilling to issue prescriptions for medical marijuana under the anti-drug Harper government are now expected to be encouraged to issue medical-marijuana prescriptions under the Liberal government, which has promised legalization of overall cannabis.

Marijuana legalization brings bonus in tax revenues to the federal and provincial coffers. CIBC World Markets’ survey estimates tax revenues as much as C$5 billion annually – on the order of 0.25% of GDP. The numbers were estimated on the basis of current estimates of Canadian recreational pot consumption, the revenue experience in U.S. states that have legalized and other factor – such as prevailing “sin tax” rates on alcohol and tobacco. (Globe and Mail, January 28)  The government must be careful not to be ambitious or greedy to set high rates for taxing cannabis sales so that high tax rates will not make legal cannabis prices too high for users. In that event, users often turn to black markets for cheaper pot to allow flow the drug money into the hands of criminal groups.

In Colorado, legalization boosted the U.S. state’s tax revenues drastically. But Prime Minister Trudeau maintains that legalized pot will not be a cash cow and that all revenues will be used to address mental health and addictions issues.

As cases in the U.S. states of Colorado, Washington and Oregon show, revenues come not only from taxation on legalized marijuana sales, but also from “pot tours” from other states and countries where recreation marijuana is not yet legal. Canada will have to be bracing for the rush of such pot tourists in the event of cannabis.

Minimum age requirements, like those for alcohol and tobacco, to prevent marijuana bought by minors; public health and addictions problems; driving while marijuana high; designating places where users can smoke the grass, like coffee shops, and many other issues are still have to be debated and tackled. (CBC News, January 11)

How legalizing marijuana will affect Canadian society and Canadians’ life style? The process for legalization and the post-legalization Canada would be an interesting case study of Canada as the world’s marijuana leader.

 

By Yoshikazu Ishizuka, TOCS senior consultant

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