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G20 promises fixes to economic ills, but little in way of concrete steps

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Leaders from the world’s top economies broadly agreed at a summit in China on Monday to coordinate macroeconomic policies and oppose protectionism, but few concrete proposals emerged to meet growing challenges to globalisation and free trade.

Lintao Zhang/Getty Images
Lintao Zhang/Getty ImagesUS President Barack Obama speaks to media after the G20 closing in Hangzhou, China, on Monday.

The two-day gathering in the scenic Chinese city of Hangzhou agreed to oppose protectionism, with Chinese President Xi Jinping urging major economies to drive growth through innovation, not just fiscal and monetary measures.

“We aim to revive growth engines of international trade and investment,” Xi said in a closing statement. “We will support multilateral trade mechanisms and oppose protectionism to reverse declines in global trade.”

Discussions at the meeting were distracted by North Korea test-firing three medium-range ballistic missiles in a defiant reminder of the risks to global security.

North Korea has tested missiles at sensitive times in the past to draw attention to its military might. But Monday’s launch risked embarrassing its main ally Beijing, which has gone to extraordinary lengths to ensure a smooth summit meeting in Hangzhou.

Beijing said it hoped relevant parties would avoid taking any actions that would escalate tensions. The United States called the launch reckless, while Japanese Prime Minister Shinzo Abe told U.S. President Barack Obama that it was unforgivable.

On other fronts, the United States tried but failed to finalise a deal with Russia for a ceasefire in Syria on the sidelines of the summit.

Greg Baker/AFP/Getty Images
Greg Baker/AFP/Getty ImagesThe so-called G20 "family photos" of all the leaders of the largest economies in the world.

Obama and Russian President Vladimir Putin had a longer-than-expected discussion about whether, and how, they could agree on a deal, a senior U.S. administration official said.

But in talks earlier on Monday, U.S. Secretary of State John Kerry and Russian Foreign Minister Sergei Lavrov were unable to come to terms on a ceasefire for the second time in two weeks, although they will meet again this week.

The G20 called for the formation of a global forum to take steps to address steel excess capacity and encourage adjustments, the White House said in a statement, one of the controversial issues discussed at the summit.

China produces half the world’s annual output of 1.6 billion tonnes of steel and has struggled to decrease its estimated 300 million tonne overcapacity, and rising prices have given companies there an incentive to boost production for export.

With the summit taking place after Britain’s vote in June to exit the European Union and before the U.S. presidential election in November, G20 leaders had been expected to mount a defence of free trade and globalisation and warn against isolationism.

Republican presidential candidate Donald Trump, who supports protectionist trade policies, has pulled into an effective tie with Democratic rival Hillary Clinton, erasing a substantial deficit.

In Germany, Chancellor Angela Merkel’s party was relegated to third place behind an anti-immigrant party in a regional election on Sunday.

“I’m very unsatisfied with the outcome of the election,” Merkel told reporters in Hangzhou.

“Obviously it has something to do with the refugee question. But I nevertheless believe the decisions made were right and we have to continue to work on them.”

One of the few areas where there was progress was in protecting the environment.

China and the United States ratified the Paris agreement on cutting climate-warming emissions on the eve of the G20 summit, setting the stage for other countries to follow suit.

British Prime Minister Theresa May, attending her first G20 summit, said governments needed to “do more to ensure that working people really benefit from the opportunities created by free trade.”

“This discussion goes to the heart of how we build an economy that works for everyone.”

International Monetary Fund Managing Director Christine Lagarde, speaking after the summit, also said more inclusive growth was a priority in the global economy.

“We need increased growth, but it must be better balanced, more sustainable, and inclusive so as to benefit all people,” she said.

It is the last time that Obama will be attending the G20 summit, and his visit to Hangzhou got off to a chaotic start.

There was no rolling staircase provided for Air Force One when it landed and Obama had to disembark from an exit in the plane’s belly. Then, a Chinese security official blocked National Security Adviser Susan Rice on the tarmac and yelled at another U.S. official trying to help journalists get closer to Obama.

China levelled responsibility at the United States and journalists for the fracas. Obama told reporters he “wouldn’t over-crank the significance” of the airport events.

When he left China on Monday, he boarded Air Force One via a full-sized staircase provided by Hangzhou International Airport.

(C) Thomson Reuters 2016


Five things you should know before you start your work day on Sept. 13

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Good morning. More than 700,000 Canadians should be watching the next Bank of Canada decision very closely. Christine Lagarde, managing director of the IMF, urges governments to support those who ‘suffer from globalization’.  And Barrick Gold signed a deal for a “digital reinvention” with Cisco Systems. These stories and more in your morning cheat sheet to the Financial Post. 

1. Canadians living close to the edge

Canadian Press
Canadian PressWatch your loonies...

There are more than 700,000 Canadians who might be watching the next Bank of Canada decision very closely because even a modest increase could push them over the financial edge, Garry Marr reports.

A new study from credit agency TransUnion shows that of the 26 credit-active Canadians in the country, 718,000 can’t even absorb a 25-basis point increase or they won’t have enough cash flow to cover their debts. Raise rates one percentage point, something not likely to happen overnight, and 971,000 Canadians end up in a cash crunch.

The next interest rate announcement is expected mid-October but the consensus among economists is there won’t be a rate hike until the third quarter of 2017. That may be part of the problem as consumers have come to expect rates will never go up and are now borrowing based on prime lending rate of 2.7 per cent.

2. Rising protectionism threatens growth: Christine Lagarde

THIERRY CHARLIER/AFP/Getty Images
THIERRY CHARLIER/AFP/Getty ImagesInternational Monetary Fund Chief Christine Lagarde

Governments need to make more of an effort to help those who “suffer from globalization,” IMF head Christine Lagarde said, adding rising protectionism is one of the biggest risks to future growth, John Shmuel reports.

Lagarde’s speech in Toronto, hosted by the International Economic Forum of the Americas, comes amid a rise in populist political movements around the world that question and openly condemn globalization.

“Those who suffer from globalization need to be helped along the way, we cannot just have growth that benefits some and leaves many without skills,” she said.

Lagarde warned that global economic growth could be slower than the IMF’s forecast of 3.1 per cent this year, and if it is, it would be the slowest rate of growth since the world’s economy shrank by 0.5 per cent in 2009.

3. Potash Corp, Agrium merger will save millions, execs say

Bloomberg
BloombergPotash Corp. of Saskatchewan and Agrium have agreed to merge in a deal that would create a global agricultural giant worth an estimated US$36 billion.

Potash Corp. of Saskatchewan Inc. and Agrium Inc. said they plan to merge in a deal that would create the largest fertilizer giant in the world with an enterprise value of $36 billion, Jesse Snyder reports.

Upon completion of the deal, the new Potash Corp. would see its potash market share rise to an estimated 62 per cent of the total capacity in North America, according to research notes by Greg Colman at National Bank Financial. Its share of the nitrogen market would also increase to 30 per cent, raising speculation about whether the merger would trigger antitrust legislation.

The CEOs of both companies said they were confident the deal would be approved because the firms occupy very different markets.

4. Barrick turns to Cisco to mine for digital gold

HO/AFP/Getty Images
HO/AFP/Getty ImagesGolden building blocks...

The biggest gold producer is joining forces with an even larger tech giant to drag the traditional world of mining into the new millennium, Danielle Bochove and Dina Bass report.

Barrick Gold Corp. signed a deal with Cisco Systems Inc. for a “digital reinvention” of its global mining operations, the Toronto-based miner said. The partnership — struck between Barrick Executive Chairman John Thornton and Cisco Chairman John Chambers — will start with the Cortez mine in Nevada.

The goal is to cut costs and wring additional value out of existing mines. For example, Barrick expects a flow of real-time data will allow it to predict when equipment is likely to need maintenance and to adjust mine plans quickly as conditions such as prices, weather or ore grades change. The partnership will increase cash flow over the long term while reducing environmental impact and increasing transparency with governments and communities, Thornton said.

5. Dentons hires former PM Stephen Harper

Jonathan Hayward/The Canadian Press
Jonathan Hayward/The Canadian PressFormer prime minister Stephen Harper

Former prime minister Stephen Harper has landed himself a job with an international law firm, Canadian Press reports.

Dentons said Harper teamed up with the firm and will work out of the Calgary office to provide clients with advice on market access, managing global geopolitical and economic risk, and maximizing value in global markets.

The law firm has on its roster former Liberal prime minister Jean Chretien, former ambassador to the U.S. Gary Doer, and James Moore, Harper’s former industry minister.

The company calls the relationship with Harper a “strategic affiliation,” noting that Harper remains chairman and CEO of his own consulting agency.

IMF’s Lagarde says Canada’s setting a good economic example for the world

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Canada continues to be a global role model for how countries can approach economic growth that benefits society as a whole, according to Christine Lagarde, the managing director of the International Monetary Fund.

“Openness and international cooperation has always been part of Canada’s DNA,” Lagarde told an audience of about 300 people in Toronto on Tuesday.

In Canada, international trade makes up two-thirds of the gross domestic product and migration has also helped the country, said Lagarde, 60.

“By welcoming about a quarter million migrants per year – and by opening their homes and hearts to refugees – Canadians are supporting growth, rejuvenating their workforce, and adding to the richness and diversity of their society.”

Globalization has helped cut the proportion of people in the world living in extreme poverty by half, Lagarde said, citing World Bank figures. And in advanced economies research suggests that trade has roughly doubled the real incomes for typical households.

While the global workforce has doubled since the early 1990s, when China, India and the former communist countries entered the global trading system, this has put downward pressure on wages – in particular, for lower-skilled workers in advanced economies, she said.

And between 1980 and 2007 global capital flows increased more than 25-fold, compared with an eight-fold expansion in global trade, Lagarde said, adding this helped investment in emerging economies, but also raised concerns about financial systems.

There’s a growing sense of discontent, especially in the industrialized world and a sense that financial institutions aren’t accountable to society, she said. These concerns need to be addressed and governments need to establish a positive environment for growth.

Canada is, in fact, leading the way by stepping up its infrastructure investment

“Central banks have done the heavy lifting in recent years,” Lagarde said. “Now fiscal policy needs to play a bigger role in countries that have additional spending headroom. Canada is, in fact, leading the way by stepping up its infrastructure investment and by increasing transfers to families with children.”

Structural reforms need to be combined with fiscal and monetary policies, said Lagarde, who in July started her second five-year term as the head of the IMF. The Washington-based organization of 189 countries aims to foster global monetary cooperation and financial stability.

“The Canadian government is following in the same path of taking bold action on fiscal policy and economic reforms,” Lagarde said.

Throughout her speech Lagarde emphasized the importance of interdependency, however she warned that global growth and trade, which is slowing, is threatened by potential protectionist approaches in the future.

Growing risk

“There is a growing risk of politicians seeking office by promising to ‘get tough’ with foreign trade partners through punitive tariffs or other restrictions on trade,” Lagarde said. “I am deeply concerned about this.

“A stronger trade engine means more competitive industries have greater incentives for innovation. It means technological innovation gets transmitted in ways that lower prices for consumers and companies.”

Today’s leaders will be judged by their “ability to create a global village on a human scale,” she concluded, adding that the IMF would continue to work towards these goals.

High standards

Lagarde was speaking at the C.D. Howe Institute’s Sylvia Ostry lecture, which was established in honour of one of Canada’s foremost economists in 1991 to raise the level of debate on trade and international policy. 

Lagarde praised Ostry for “setting the highest standards, not only for economists but for all those who believe that public service is more than just a job.”

Ostry, who started her career in 1952 as a lecturer at McGill University and went on to hold numerous senior economic positions in the government and at the Organization for Economic Co-operation and Development as its chief economist, said she was moved by Lagarde’s tribute.

And Ostry said she was pleased Lagarde addressed the critical issue of how to manage globalization in an inclusive way.

IMF head Christine Lagarde hopes Ottawa’s stimulus plan ‘goes viral’

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OTTAWA — Christine Lagarde has some strong advice for developed nations and those still in the process: follow Canada’s lead if they want to create jobs, grow their economies and avoid the temptation to build trade walls.

“I hope it (Canada’s plan) can actually go viral,” the managing director of the International Monetary Fund said Tuesday.

“At the IMF, we have strongly advocated what we call the three-pronged approach,” Lagarde told reporters in Ottawa, standing alongside Prime Minister Justin Trudeau following a private meeting.

“Because growth has been too low for too long and for too few, we strongly believe — based on the analytical work that we do — that a combination of monetary policy, fiscal policy and structural reforms (can) enhance the capacity of the state to support the development of economic growth, to encourage economic enterprises to develop investment, to encourage innovation and creation of jobs,” she said.

“The policy adopted by Canada under the leadership of (Prime Minister) Trudeau is indeed demonstrating this three-pronged approach that we are advocating.”

Lagarde’s comments in Ottawa came the day after she spoke to an international economic gathering in Toronto, where she urged developed nations to do more to protect those who may be negatively affected by increased global trade.

The visit by Lagarde, previously France’s finance minister, has focused on concerns that globalization and the benefits of free trade have not been equally shared by a large portion of the world’s population.

“We need to make globalization work for all,” she said during a Toronto speech earlier Tuesday.

“Growing inequality in wealth, income and opportunity in many countries has added to a groundswell of discontent, especially in the industrialized world (where there is) a growing sense among some citizens that they ‘lack control,’ that the system is somehow against them,” Lagarde told a meeting sponsored by the C.D. Howe Institute, a Toronto-based think-tank.

Lagarde also stressed that governments must do more to help those who have been negatively impacted by globalization, including those who have lost jobs. To counteract that trend, the IMF chief said there needs to be more access to education and training.

In an address Monday in Toronto, Lagarde said “those who suffer from globalization need to be helped along the way.”

“We cannot just have growth that benefits some and leaves many without skills, without retraining,” she told those attending the International Economic Forum of the Americas.

Lagarde also raised the issue of increased protectionist views in reaction to globalization.

Those who suffer from globalization need to be helped along the way

There is a “growing risk of politicians seeking office by promising to ‘get tough’ with foreign trade partners through punitive tariffs or other restrictions on trade,” she said.

Such rhetoric has become popular fodder for U.S. Republican presidential candidate Donald Trump, who — along with Democratic nominee Hillary Clinton, to a lesser extent — is opposed the 12-nation Trans-Pacific Partnership, which President Barack Obama has already signed off on.

The positions of the U.S. candidates on the North American Free Trade Agreement appear to be wider apart. Trump has said he wants to tear up the 1994 deal and start negotiations over again, while Clinton has drifted toward the protectionist camp but remains fuzzy about details on how to improve the U.S.-Canada-Mexico pact.

Trudeau, speaking to reporters Tuesday in Ottawa, said Lagarde’s three-pronged initiatives “are goals that Canada shares.”

“I know that our team is committed to being a strong partner for the IMF and working with Madam Lagarde on a wide range of issues including gender equality, on which she has been a leader throughout her career.”

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After hitting peak levels, global markets set for a sharp reversal: Bank of America

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Some of the hottest trades of the past few years could stage a sharp reversal as global markets face “peaks” in liquidity, free trade, and income inequality. 

That’s the big-picture call from Bank of America Merrill Lynch, whose analysts argue in a report published Thursday that an apparent fightback against globalization in advanced economies represents a game-changer for global asset-allocation. 

“We are convinced that policy is decisively shifting in a direction that is less positive for ‘deflation assets’  and more positive for ‘inflation assets,'” the team, led by Chief Investment Strategist Michael Hartnett, write. This year and next, investors face a reversal of “bullish” trends that have buttressed globalization and liquidity in recent years, they argue. 

 

In sum, Hartnett and team say it’s time for investors to consider a new normal for equity and fixed-income markets. 

“A reversal of these trends, together with a shift toward fiscal stimulus and higher interest rates strongly argues that the excess returns from stocks and bonds in the past eight years are also likely to reverse,” they say.

Explaining their rationale in predicting declining liquidity, the team cites declining enthusiasm among central bankers in Europe and Japan towards negative interest-rate policies. “Central banks are starting to feel political backlash for fueling inequality, and ‘Quantitative Failure’  (671 rate cuts since Lehman bankruptcy has fostered neither robust economic recovery nor ‘animal spirits’  as corporations & households continue to hoard cash) means that the era of excess liquidity and QE is now largely behind us.” 

Anti-immigration and anti-trade sentiment also appears to have increased in the U.S. and U.K. in recent months, while trade tensions are rising. Against this backdrop, BAML reckons trade policies might become more restrictive in the coming years. “Events show nations are becoming less willing to cooperate, more willing to contest,” they write, adding that global trade expansion in 2016 is forecast at around 1.7 percent of GDP, below the rate of economic expansion, a development historically associated with recessions.  Inequality might also be reaching a boiling point in a bevy of developed markets, raising the prospect of active fiscal policies, which BAML reckons will help fuel inflation. In this scenario, investors should buy fewer bonds as “a shift toward Keynesian policy is likely to raise growth expectations and interest rates.”

Amid signs of a growing backlash against the inequities generated by globalization, analysts at Bank of America last month foresaw a new era with looser fiscal policy in developed countries — combined with trade protectionism and wealth redistribution — that would redraw the global investment map. The report on Thursday adds meat to this call; BAML on Thursday says it is bullish on stocks and commodities and bearish on bonds. The bigger returns are likely to come from ‘zero interest rate policy losers,’ they conclude. 

Nevertheless BAML concedes central banks could remain very accommodative in their policies, and a recession could imperil its calls to snap up inflation-hedges, while the IMF doubts a looser fiscal policy will be unleashed next year. 

 

Diane Francis: Trump poised to undo much of what Davos has tried to accomplish

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The Davos elite gather from Jan. 16 to 20 in the Swiss Alps to do business and to advance a decades-old agenda of globalization, multilateralism and environmental responsibility.

Davos embodies a distinctly “European” sensibility and Canadian governments love its multilateral vibe. But the only American president to embrace this fully was Bill Clinton. No president since his tenure has attended and president-elect Donald Trump will be no exception.

Trump, along with Marie Le Pen and the Brexit crowd, represent the pushback against much of what Davos has promoted. These leaders have launched successful movements amongst those workers who have been left behind as a result of free trade, green policies, and automation.

The paradigm shift is that America will bi-lateralize trading relationships, thus reordering the Davos agenda. Protectionism will replace trade liberalization and bilateralism will supplant multilateralism. For at least the next four years, the United States will reconstitute each of its relationships one by one.

This is both bad and good news for Canada. A renewed bilateral relationship, and muted three-way NAFTA one, will help open up the common border more than has been the case, given Mexico’s problems and low wage rates. Canadians have little to fear because the relationship is already symbiotic and harmonious. Trade is just about equal in absolute numbers and most years Canada has a relatively small trade deficit. This is the world’s most mutually beneficial and integrated trading relationship.

Trump will also open the government coffers, which will create mixed results. His tax cuts, pro-fossil fuel policy and trillion-dollar infrastructure spend will create an economic boom that will indirectly benefit Canada. But it may also bring about inflation and higher interest rates. In addition, his 15 per cent corporate tax rate goal will force Ottawa to match, costing the treasury billions a year.

And there will be horse trading. Trump will approve Canada’s Keystone XL, but in return will want something in return. This may be a request to dramatically increase defense spending or, alternatively, to blend the two militaries into one NORAD force to protect coastlines and airspace.

Obviously, the relationship with Washington is the highest priority and it’s unlikely there will be chemistry between its leaders in a policy sense. But there won’t be a lot of pushing around as will be the case with Mexico, China and scores of others. There will be no talk of walls and respect, if only because Canada’s army of snowbirds and brain drainers (more than 2.5 million people live full and part time in the U.S.) contribute as much to U.S. GDP as the equivalent GDP of several small states.

Canada is also unlikely to be slapped with taxes on our exports, given that the lion’s share of exports in both directions are merely intra-corporate transfers between parent companies and branch plants. Taxing Canadian imports damages American multinationals like the auto makers, oil companies and retailers who dominate the Canadian economy.

This year, Davos will be twice sabotaged by Mr. Trump. Firstly due to policy divergence, but secondly because his Jan. 20 inauguration takes place during the conference. This guarantees sparse attendance among heads of state who have traditionally trekked to Davos to eat canapés with the corporate leaders, who now are going to Washington to see the Great Man crowned.

But the push back movements sweeping mature democracies have also led many leaders – with one notable exception – to boycott Davos. Canada’s Prime Minister is touring the country’s Tim Hortons shops and other venues to stay in touch with the common folk. The leaders of Germany, Britain and France are not attending and Israel’s Prime Minister has cancelled to attend Trump’s inauguration.

Despite all this, the leader of the biggest beneficiary of globalized trading – China’s President Xi Jinping – is attending Davos for the first time. 

His attendance at this juncture is ironic. China has capitalized the most from the Davos-supported trade agenda but his decision to make a splash in this remote Swiss enclave comes just as his customers and their leaders change course.

Maybe he would have been well-advised to fly to Washington and procure a ticket to some inaugural festivities instead.

While Davos’ political elite frets over Donald Trump, the corporate elite looks for profit

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The political elite, many of whom are concerned about the rise of Brexit and U.S. President Donald Trump, spent some time whining and dining during last week’s World Economic Forum in Davos, Switzerland.

But the corporate elite, those who financially support the world’s most rarified gathering, were busy figuring how out to profit by divesting from Britain, Mexico or China and investing more in the United States.

Conversations included how banks who have called London home for two decades are going to scatter operations across other cities in the European Union, and how UK-based automakers will downsize and relocate to the continent. Others talked about redirecting their supply chains and manufacturing facilities from low labor cost countries to the U.S.

All of this is ironic. Trump talks like he is anti-establishment but is putting together the most elite cabinet in history, consisting of millionaires and billionaires. He wants to spend trillions building infrastructure, slashing taxes and regulations. He wants to force companies to stop offshoring and create jobs stateside.

“The U.S. looks like it’s a great place to invest right now,” Huw Jenkins, vice chairman of Brazil’s Grupo BTG Pactual told Bloomberg. Even China’s giant holding companies said they will be on the hunt for investments and companies in the U.S. to buy.

All of which may or may not help the average American, but it certainly will benefit the corporate elite. That is why there has already been a Trump market boom.

But billionaire George Soros, also a New Yorker and pillar of Davos, is skeptical. This week he called Trump a “con man,” has made large bets against markets in anticipation of Trump. But he has lost an estimated $1 billion doing so. Unabashed, he maintains that there will be revaluation of markets because Trump’s ideas contradict his advisers and will cause fights, inconsistencies and uncertainty.

However, like it or not, Trump brilliantly perceived and surfed the global zeitgeist. An study released in Davos by the Edelman Group, quantified this. Called the “Edelman Trust Barometer,” this year’s annual survey found that the disparity between the elites who “trust” their national institutions and the rest of their populations is widening in every country in the world.

This is a harbinger for more electoral upsets, said Richard Edelman to his select audience. Among the lowest “trust” levels are in countries facing elections shortly: In France, trust in institutions is 38 per cent among the general population; in Germany, it’s 39 per cent; Turkey, 41 per cent; Japan, 34 per cent; Ireland, 35 per cent; Sweden and South Korea at 36 per cent, to name a few.

“This is barometer for uncertainty,” he added.

The reasons for the mistrust are the same, regardless of geography: erosion of social values, globalization, corruption, immigration and the pace of innovation. Even in the United States and Canada, trust levels are among the lowest in years for both, at 47 per cent among the general population while over 60 percent among the elites.

This becomes a target-rich reality for populists everywhere, who like Trump, blame “culprits” such as the governing elite and globalization of trade.

“For too long a small group in our nation’s capital has reaped the rewards of government while the people have borne the cost,” Trump said in his inaugural speech.

Then he attacked globalization. “The wealth of our middle class was ripped from our homes and redistributed all across the world,” he said.

Of small relief to many of Trump’s opponents was his clear promise to insure that benefits are spread fairly across the entire population.

“Whether we are black or brown or white, we all bleed the same red blood of patriots,” he said, adding that a child born in a Detroit ghetto or one born in Nebraska each deserve equal opportunities.

His address was not lofty but a reconstituted version of his stump speech with a few more flourishes. It was tinged with anger and not aspirational. And it was as feisty as fits the mood of a country in which many have lost faith in their institutions.

Financial Post

‘There is no turning back the tide:’ Globalization is officially in retreat

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At the end of their terrible year, globalists clung to one small hope: maybe Theresa May and Donald Trump weren’t serious?

The new British Prime Minister had said little about how she would quit the European Union, so perhaps a “soft” Brexit was possible?

In America, the president-elect occasionally tweeted and said things that didn’t sound totally insane to the men and women who frequent the annual gathering of global elites in Davos, Switzerland. Stock markets surged to records, as traders discounted the threat that Trump represented to the global order that Wall Street had exploited so effectively to enrich itself.

Recent events have crushed those hopes. May declared that she would pursue a clean break from the EU, and told her European counterparts that she would make their lives difficult by slashing British tax rates if they didn’t offer her a good deal.

Trump’s inauguration speech left no room for preserving the current system of international commerce. “We must protect our borders from the ravages of other countries making our products, stealing our companies and destroying our jobs,” he said. Trump used his first full day of work at the White House to abandon the Trans-Pacific Partnership and start the process to renegotiate the North American Free Trade Agreement.

Bottom line: Globalization is officially in retreat.

“There is no turning back the tide,” said Eric Miller, a Washington-based trade consultant who previously held senior positions at Canada’s industry department and at the Inter-American Development Bank, which uses contributions from its member countries to underwrite projects aimed at reducing poverty in Latin America.  

How high might that protectionist tide rise? To what extent will the world change? Globalization might be unpopular now, but the more-the-merrier approach to trade that characterized the pre-Trump era was hardly a failure: The world was relatively peaceful and more than 1 billion people were delivered from extreme poverty between 1990 and 2015.

May and Trump insist they are free traders, but they want to negotiate with other countries one-on-one. That is great if you are the world’s biggest economy, or home to the world’s leading financial centre. What will it mean for smaller economies, such as Canada, which tend to do better in bigger trading arrangements?

If anyone offers definitive answers to any of those questions, he or she has an exaggerated sense of his or her powers of foresight, especially when it comes to predicting the path of U.S. economic policy.

“There is simply too much noise and contradiction in President Trump’s public utterances to have any degree of confidence regarding his likely actions,” said James Haley, a former Canadian finance official who until recently was Canada’s representative at the International Monetary Fund. “This problem of uncertainty is compounded by uncertainty regarding how others will respond.”

It seems likely that the immediate future will be dominated by high-stakes negotiations, whether it is Trump’s promise to overhaul NAFTA, or the difficult work of disentangling the UK from the EU. This compounds the uncertainty because it is difficult to separate conviction from posturing.

Trump has filled his administration with corporate titans and military men who excelled in worlds where tactics are more important than ideology.

Philip Delves Broughton, the author of What They Teach You at Harvard Business Schoolwrote in the Financial Times that the new U.S. president’s rhetoric about trade could be mere gamesmanship.

He noted that Wilbur Ross, the billionaire turnaround artist who is Trump’s nominee to run the commerce department, said as much during his confirmation hearing. “When you start out with your adversary understanding that he or she is going to have to make concessions, that’s a pretty good background to begin,” Ross told a Senate committee.

The British prime minister may have been doing the same thing with her warning that she could undermine the EU’s competitiveness by turning her country into a European version of Singapore, which separated itself from its Asian neighbours with low corporate taxes and an array of free-trade agreements.

That is how it was received by Germany’s finance minister, who was unmoved. “I can’t really imagine that the UK, this great nation, could compare itself with Singapore, so I am not going to be shocked,” Wolfgang Schäuble said at the World Economic Forum in Davos.

Still, if business needs stability to thrive, there is nothing comforting about the world’s most important economies lining up to reset the terms of global commerce.

Miller, who was a senior adviser at the Business Council of Canada, an association of chief executives of the country’s biggest companies, before starting his own consultancy last year, predicts a return of “19th century ‘Great Power’ politics,” which is essentially what leaders were trying to dilute when they created institutions such as the IMF and committed to multilateral trade at the end of the Second World War.   

Miller said he thinks the Trump administration’s preoccupation could be China. That also could be said of Barack Obama, who began his tenure in the White House as a trade skeptic, and then embraced the TPP as a means of countering China’s growing influence in Asia.

The indirect approach favoured by Obama had the advantage of avoiding a trade war between the world’s two economic giants. But it may also have let China get away with a little too much.

Trump’s rhetoric notwithstanding, there may be no better statement on the state of globalization than the effort to anoint Chinese President Xi Jinping as its new champion.

Denis Balibouse/ Pool via AP
Denis Balibouse/ Pool via APChinese President Xi Jinping stands at the United Nations European headquarters in Geneva, Switzerland.

Xi made his first trip to the annual Davos gathering of the global elite this year, telling his audience that protectionism was akin to “locking oneself in a dark room.” That’s all fine, except a growing body of research suggests Chinese imports are responsible for wiping out large swaths of Western industry.

Brad Setser, a former treasury official in the Obama administration who now is a senior fellow at the Council on Foreign Relations in New York, calculates that China exports three times as much as it imports. That’s not what was supposed to happen when China was granted entry into the World Trade Organization.

The country balked at opening its borders as widely as others did for it, forcing international companies that wanted to do business in China to form joint ventures with local partners. By taking advantage of the West’s eagerness to do business with an emerging economic superpower, China helped undermine the system that supported its rise.

Now Xi must contend with an openly antagonistic administration in Washington, which already has irritated Beijing by engaging Taiwan. Xi, who is trying to consolidate power ahead of the Communist Party’s next twice-a-decade congress later this year, has every incentive to match bellicosity with bellicosity. “The danger is that you may be forced to follow through on a reckless threat that is harmful to you and your opponent,” Haley said.

To borrow a term from economics, the immediate future looks “suboptimal.” Trade that was effectively free looks like it will be replaced by trade that is essentially managed by the U.S. or China, who, spurred by rivalry, will dictate the terms of access to their vast markets.

There could be resistance. Australian Prime Minister Malcolm Turnbull this week said he still wants to implement the TPP, and even suggested that China would be invited to replace the U.S. as the anchor economy. Australia would suggest that, as China is its main trading partner.

How close can Canada get to China without risking a backlash from the Trump administration in the NAFTA negotiations? Conservatives will shudder, but for the foreseeable future, the global economy will be shaped by lawyers. That’s because every country and every industry will be seeking to shape all these new trade agreements to their advantage. “It will be a gold rush for lobbyists,” said Miller.

So much for draining the swamp.

Special to the Financial Post


Will Donald Trump realize that trade deficits aren’t the problem with the American economy?

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No one likes the word deficit. In government finance it means you spend more than what you raise in revenue. And in trade it means you import more than you export. U.S. President Donald Trump has repeatedly pointed to widening trade deficits with countries such as China and Mexico as proof positive that his predecessors have made bad trade deals.

But it is misleading to think of trade deficits in that way. At the very least, the reality is far more nuanced.

First, imports have a beneficial impact. More countries selling to the U.S., or Canada, means more affordable goods for consumers, which has helped boost what’s called the “C” variable — consumer spending. In the U.S., in fact, if we remove food and energy from the equation, prices of goods have fallen every year since the implementation of NAFTA. And while many businesses and high-skilled workers benefit heavily from trade, most lower-income workers also benefit since they, in disproportionate numbers, buy the cheaper imports that have flooded advanced-world markets.

So raising trade barriers in the U.S. is going to lead to higher prices for consumers, creating some blowback, even if some manufacturing jobs do end up coming back to America. Trump’s new Commerce Secretary, Wilbur Ross, is making more positive sounds about lowering trade barriers abroad. The administration should think along those lines first, if the focus remains on U.S. trade deficits.

However, any relevant trade debate is less likely to be constructive if the Trump administration crafts its actions around the notion that trade deficits are inherently bad.

After all, imports are often used as cost-effective inputs for the production of export goods. Thus what is important to GDP is not how much we export relative to our imports, but the extent to which imports contribute to our domestic production and welfare in general. And better yet, the real gain from trade is that it enhances our ability to specialize, leading to gains in productivity — without imports, there would be fewer well-paying export jobs. One reason why Canada’s trade balance swung into trade deficit in the aftermath of the Great Recession is that our economy was actually doing better than that of other nations.

Of course, more open trade, in general, has not benefited everyone and this is where the real debate should focus.

If you are lower-skilled and worked for years in certain manufacturing jobs, globalization — symbolized in the U.S. by a flood of imports from China or Mexico — has likely had a negative impact on your relative income level and living standard. China’s ascension to the WTO, in particular, and the subsequent required reduction in trade barriers with that country, flooded advanced economies, including the U.S., with cheap imports. Overall, those imports did lead to job losses in some U.S. manufacturing sectors, most notably in parts of the country that voted for Trump. It is not surprising that affected individuals latched on to Trump’s anti-trade sentiments.

We should be having a real discussion on what to do about those who have lost out from globalization and its companion, technology. Retraining can only do so much in an era of fast-paced changes. What is required is a rethink of lifetime training and social safety nets — and sharper thinking about the tradeoffs between efficiency and equity. But this will all be more difficult if we start thinking of trade as something that needs to be brought in balance, at the cost of reduced overall trade flows.

Jeremy Kronick is a Senior Policy Analyst at the C.D. Howe Institute.

The importance of rural Canada and its growing divergence from cities

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Philip Cross

Like many Canadians, I spent my vacation exploring the countryside. Rural Canada plays a much larger role in our society that is conveyed in our political discourse or by media pundits. Beyond its natural beauty, the countryside houses our cultural inheritance of traditions, experiences and wisdom in a way that our increasingly homogenized and globalized cities no longer can. A good example of the growing divergence between cities and the hinterland was the stark difference between the “Brexit” vote in cosmopolitan London and the rest of England.

The rural hinterland is widely regarded as the repository of any society’s core principles and character. Former President Jacques Chirac called French regions “the guardians of our memory.” When the writers of the West Wing TV series wanted to establish the moral bona fides of the ultra-liberal President Bartlett, they set his roots in rural New Hampshire to emphasize his connection to fundamental American values. To celebrate Canada’s 150th year, Parks Canada wisely granted free access to our national parks and historical sites so Canadians could reconnect with their roots. This reflects how rural areas are regarded as the “heartland” of any nation.

The conservative historian Donald Creighton wrote that conserving the past is as important as innovating for the future, although the latter dominates government agendas these days. An age of disruptive technological innovations more than ever requires the permanence of values and place that is based in the country. Recognizing our rural roots and inheritance is not “ancestor worship,” but acknowledges that the conservation of traditions and values plays a crucial role in building acceptance of change by reducing the fear that important elements of what makes a society unique will be lost.

Statistics that say 81 per cent of Canadians are urban imply rural residents are of little importance. However, if people were asked whether they spent time in rural areas, the share would be much higher than the 19 per cent implied by the official stats, another example of how society cannot be understood by numbers alone. Most city-dwellers flee their azoic habitats to spend their vacations and weekends in rural settings, often in cottages and cabins to reconnect with their rural heritage and to revert somewhat to the way of life of previous generations. Here in Ottawa, the local CBC weekend morning radio program is called “In Town and Out” in recognition of the fluidity of the rural/urban distinction at that time of the week. This constant movement of people between town and country is one justification for not requiring rural election ridings to have populations as large as city seats, since the snapshot of geographic location captured by the census numbers ignores the flow of population at regular intervals.

Unfortunately, the bridge between city and country carries some societal problems. Drug problems, once the scourge of inner cities, have migrated to the rural U.S. due to the opioid crisis, while also making inroads into rural western Canada. Economic problems are also spreading out of city centres as gentrification forces lower income people to leave the inner cities, creating what is called “slumburbia.” Soaring house prices in downtown city cores are rapidly aggravating this phenomenon.

However, a stark urban/rural divide remains in some areas of economics and politics. The urban trend to sharing assets such as cars, homes and even office space has no counterpart in the country, where exclusive ownership reigns. And the isolation of individuals in cities, aggravated by social media replacing actual human contact, helps breed political divisions while its anonymity fuels the inflammatory rhetoric that harms political debate and consensus-building.

Cities are becoming less representative of their country and region. This is especially true for Toronto and Vancouver, which are increasingly attached to the global economy and distanced from their rural hinterland. They are plugged into global supply chains (including for people, who often move between cities in different countries) that have little connection with nearby regions. As noted by Edward Luce in The Retreat of Western Liberalism, cities increasingly drain labour from surrounding areas while buying less in return. One implication of major cities becoming more standardized is that rural areas increasingly are what make each region distinctive.

Cities were originally built to keep out the surrounding barbarian savages. Today, rather than building walls around cities to insulate them from the outside world, we need to foster their contact with rural areas to preserve our values, traditions and way of life. This may also help preserve the economic advantage of cities. Luce speculates that the increasing isolation of elites in cities threatens their economic dominance. Cities traditionally were more productive because of the constant cross-fertilization of competing ideas they encouraged, but now they are becoming an echo chamber for the politically correct liberal elites that dominate downturn cores.

Philip Cross is a Senior Munk Fellow at the Macdonald-Laurier Institute.

Polls suggest Americans are not anti-trade, but want help adjusting to it

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WASHINGTON — An influx of new polling suggests Americans aren’t especially interested in turning back the clock on globalization — but do want policies that help American workers compete in the international-trade era.

A massive survey released Tuesday by Pew Research provides a glimpse into the American psyche as the president threatens to scrap trade deals, including the 23-year-old NAFTA agreement.

The 5,000-person triennial survey breaks American voters down into nine types: four brands of conservative, four types of liberal and one category of bystanders with little interest in politics.

It examines their views on a variety of issues and illustrates how the most active partisans tend to have the most extreme politics, giving small subsets of the population the opportunity to dominate large political parties.

A rare topic that unites the staunchest conservative and liberal ideologues might be of interest to Canadians, Mexicans and Americans following the NAFTA drama: continuing global trade.

When Americans are given a choice between the bring-back-old-jobs message commonly heard in Donald Trump’s Washington versus an economy where American workers are trained to succeed in a globalized future, it’s no contest.

The latter wins in a slam-dunk.

“Bring back jobs that match current skills,” got a mere 16 per cent support, versus 81 per cent for “Train in skills needed for jobs in demand” — and that pattern held up through all categories, including the group called “Country First Conservatives,” the archetypal Trump supporters, who favoured the retraining message over the bring-back-jobs message by 62 per cent to 30 per cent.

The pattern continued in a question about participation in the global economy.

Just 29 per cent said they supported a statement that such participation is a “bad thing because it lowers wages and costs jobs,” versus 65 per cent who said it’s a “good thing because it provides the U.S. with new markets and opportunities for growth.” On this question, Country First Conservatives were alone as the only one of nine categories to call it a bad thing (45 to 39), easily outnumbered by other types of conservatives and liberals.

This poll’s findings match other new polling.

A study by the University of Maryland’s Program for Public Consultation released last week found very narrow support for NAFTA: 51 per cent said it’s been good (mainly Democrats), and 46 per cent said it’s bad (mostly Republicans).

But it found some consensus on a path forward.

When asked whether they favour free trade combined with programs to help affected workers, favour free trade without new support programs for workers, or oppose free trade, 77 per cent fell into the two pro-trade categories. Only 22 per cent said they opposed free trade.

In addition, more than three-quarters supported adding new labour and environmental standards to trade agreements to remove unfair advantages that sway investment away from the United States.

Only 38 per cent wanted to slow down or reverse international trade — but Republicans were split down the middle, at 50 per cent. That split has played out within the Trump cabinet, amid searing debates over what to do with NAFTA.

Donald Trump’s UN ambassador has just made clear which side she’s on.

Nikki Haley said that when she was South Carolina governor, people were overjoyed to have five international tire companies and three international auto companies in her state, saying, “Everyone wins” from those partnerships.

“I don’t see us tearing up any deals. If that was the case, we would have done it already,” she told a discussion at the George W. Bush Institute, when NAFTA came up.

“There’s nothing wrong with going back and looking at them. There’s nothing wrong with seeing if we can make them better.”

That pro-trade wing of the GOP is extremely powerful, the Pew numbers suggest.

The most politically engaged group of party supporters, and the most numerous, is what Pew calls “Core Conservative” — richer, more educated, ideological people whose opinions run closer to Haley’s. More than two-thirds of people in this group called global trade a good thing, versus barely one-third of people in the Country First category.

And this group carries disproportionate weight, according to Pew: Core Conservatives represent just 13 per cent of the public, but make up about 31 per cent of all Republicans, and 43 per cent of all politically engaged Republicans, single-handedly swaying such debates as climate change, where their view becomes the party view.

A third new survey also finds big support for worker-friendly trade policies.

Veteran Democrat pollster Stan Greenberg wrote a memo last week urging his party to get more involved in the NAFTA debate. His Democracy Corps polled 1,000 respondents and found the most convincing argument for changing NAFTA was that American workers are losing because it lacks enforceable labour and environmental standards, so companies shift jobs to low-cost Mexico.

Greenberg wrote: “Over 80 per cent of Trump voters and over 60 per cent of Clinton voters found that (to be) a convincing argument against the current NAFTA. But new terms to remedy this do not appear to be at the top of the Trump trade agenda.”

The Trudeau government overlooks China’s dangerous duplicities just to land a trade deal

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Most of what Canadians read and hear about modern China occupies a narrow space between calculated dishonesty and aggressive deception.

A Chinese economy still overwhelmingly run through politicized structures is portrayed as a hub of free enterprise. A state ruled by a despotic clique is sold as a forward-thinking global leader. A regime bent on deploying technology to control its populace and wage cyber warfare abroad, is featured as a bastion of technological marvels. A country that holds little genuine affinity for Canada, beyond what will serve its own interests, is presented as a loyal, unambiguous friend.

That China is a different nation today than it was 40, 30, or even 10 years ago is undeniable. But the unqualified praise for the lessons Beijing belatedly learned since the 1980s must not be used to conceal how China remains captive to a deeply regressive governing ideology — a mixture of Communism, chauvinism, mercantilism, and colonialism.

Indeed, in many ways the defining story of the last few years has been the steady eclipse of Beijing’s much-vaunted agenda of “reform” by a resurgent and unapologetic pursuit of geopolitical self-interest explicitly at odds with that of its supposed Western partners.

The rise of President Xi Jinping, an ultra-establishment hardliner, has been particularly revealing. His short reign has already made clear that the People’s Republic will be animated by solidified one-party rule, entrenchment of a neo-Communist command economy, and consolidation of a vast empire of interests abroad. Persistently troubling trends show no sign of slowing, including the increasing “weaponization” of Chinese commerce to elicit geopolitical submission, rigid alliances with rogue states, self-serving distortions of international law, and an aggressive defence of the so-called “Chinese model” of development unburdened by “foreign” notions of democracy and human rights.

With China’s industrialization, forays into globalization and technological innovation, the country’s economic interests have never been more globally engaged, and today they correlate directly to its more formidable military and strategic ambitions. China is no longer willing to hide its strength and bide its time, as the architect of its state capitalist model Deng Xiaoping had recommended long ago. Instead, President Xi is shifting China’s posture from strategic patience toward seizing the strategic advantage — by rapidly developing China’s digital, economic, political and military arteries around the world, with Beijing as the heart of a rising and reinvigorated Middle Kingdom.

The Trudeau government is not the first in Canadian history to view China’s strength and size with reckless excitement, but it is certainly the first to channel this enthusiasm into a policy goal as substantive as free trade. Free trade with China, which Ottawa pursues with a dogged determination they’ve been unable to muster for much else, is marketed as a panacea to alleviate virtually everything that ails modern Canada, from sluggish economic growth to traditional insecurities of “American dependence.”

In the pursuit of these dreams, much will be sacrificed. Whatever other criticisms one can offer, the government’s project cannot be dismissed as naive. The men and women staffing the senior levels of government fully grasp the realities of the Chinese regime and its motives. They pursue their project not from ignorance but in spite of this knowledge.

It is clear, however, that broad public ignorance of Chinese truths is an important means to achieving Ottawa’s desired ends. Only then can the tough questions be dodged and appropriate skepticism dismissed. Global Affairs Canada, partisan journalists, and taxpayer-funded think tanks thus produce a relentless deluge of spin, half-truths, and happy talk about our Chinese friends, while condemning even the mildest voices of concern as paranoid, “red baiting,” or even racist. The result is an intellectual atmosphere in which honest dialogue is chilled, constrained, and stagnant.

An honest guide is needed to the unflattering truths of a country whose reputation Canada’s present leaders insist on shielding as they tighten bilateral ties. China is a nation whose guiding spirit is not the thoughtful pragmatism of a promising superpower, but the calculated cynicism of an insecure state. Collectively, we should be reminded to see China as it actually is, and not as some may wish it to be.

Shuvaloy Majumdar is a Munk Senior Fellow at the Macdonald-Laurier Institute, which is publishing this week “The Dragon at the Door,” a series of essays on the realities of 21st century China.

After hitting peak levels, global markets set for a sharp reversal: Bank of America

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Some of the hottest trades of the past few years could stage a sharp reversal as global markets face “peaks” in liquidity, free trade, and income inequality. 

That’s the big-picture call from Bank of America Merrill Lynch, whose analysts argue in a report published Thursday that an apparent fightback against globalization in advanced economies represents a game-changer for global asset-allocation. 

“We are convinced that policy is decisively shifting in a direction that is less positive for ‘deflation assets’  and more positive for ‘inflation assets,'” the team, led by Chief Investment Strategist Michael Hartnett, write. This year and next, investors face a reversal of “bullish” trends that have buttressed globalization and liquidity in recent years, they argue. 

 

In sum, Hartnett and team say it’s time for investors to consider a new normal for equity and fixed-income markets. 

“A reversal of these trends, together with a shift toward fiscal stimulus and higher interest rates strongly argues that the excess returns from stocks and bonds in the past eight years are also likely to reverse,” they say.

Explaining their rationale in predicting declining liquidity, the team cites declining enthusiasm among central bankers in Europe and Japan towards negative interest-rate policies. “Central banks are starting to feel political backlash for fueling inequality, and ‘Quantitative Failure’  (671 rate cuts since Lehman bankruptcy has fostered neither robust economic recovery nor ‘animal spirits’  as corporations & households continue to hoard cash) means that the era of excess liquidity and QE is now largely behind us.” 

Anti-immigration and anti-trade sentiment also appears to have increased in the U.S. and U.K. in recent months, while trade tensions are rising. Against this backdrop, BAML reckons trade policies might become more restrictive in the coming years. “Events show nations are becoming less willing to cooperate, more willing to contest,” they write, adding that global trade expansion in 2016 is forecast at around 1.7 percent of GDP, below the rate of economic expansion, a development historically associated with recessions.  Inequality might also be reaching a boiling point in a bevy of developed markets, raising the prospect of active fiscal policies, which BAML reckons will help fuel inflation. In this scenario, investors should buy fewer bonds as “a shift toward Keynesian policy is likely to raise growth expectations and interest rates.”

Amid signs of a growing backlash against the inequities generated by globalization, analysts at Bank of America last month foresaw a new era with looser fiscal policy in developed countries — combined with trade protectionism and wealth redistribution — that would redraw the global investment map. The report on Thursday adds meat to this call; BAML on Thursday says it is bullish on stocks and commodities and bearish on bonds. The bigger returns are likely to come from ‘zero interest rate policy losers,’ they conclude. 

Nevertheless BAML concedes central banks could remain very accommodative in their policies, and a recession could imperil its calls to snap up inflation-hedges, while the IMF doubts a looser fiscal policy will be unleashed next year. 

 

Polls suggest Americans are not anti-trade, but want help adjusting to it

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WASHINGTON — An influx of new polling suggests Americans aren’t especially interested in turning back the clock on globalization — but do want policies that help American workers compete in the international-trade era.

A massive survey released Tuesday by Pew Research provides a glimpse into the American psyche as the president threatens to scrap trade deals, including the 23-year-old NAFTA agreement.

The 5,000-person triennial survey breaks American voters down into nine types: four brands of conservative, four types of liberal and one category of bystanders with little interest in politics.

It examines their views on a variety of issues and illustrates how the most active partisans tend to have the most extreme politics, giving small subsets of the population the opportunity to dominate large political parties.

A rare topic that unites the staunchest conservative and liberal ideologues might be of interest to Canadians, Mexicans and Americans following the NAFTA drama: continuing global trade.

When Americans are given a choice between the bring-back-old-jobs message commonly heard in Donald Trump’s Washington versus an economy where American workers are trained to succeed in a globalized future, it’s no contest.

The latter wins in a slam-dunk.

“Bring back jobs that match current skills,” got a mere 16 per cent support, versus 81 per cent for “Train in skills needed for jobs in demand” — and that pattern held up through all categories, including the group called “Country First Conservatives,” the archetypal Trump supporters, who favoured the retraining message over the bring-back-jobs message by 62 per cent to 30 per cent.

The pattern continued in a question about participation in the global economy.

Just 29 per cent said they supported a statement that such participation is a “bad thing because it lowers wages and costs jobs,” versus 65 per cent who said it’s a “good thing because it provides the U.S. with new markets and opportunities for growth.” On this question, Country First Conservatives were alone as the only one of nine categories to call it a bad thing (45 to 39), easily outnumbered by other types of conservatives and liberals.

This poll’s findings match other new polling.

A study by the University of Maryland’s Program for Public Consultation released last week found very narrow support for NAFTA: 51 per cent said it’s been good (mainly Democrats), and 46 per cent said it’s bad (mostly Republicans).

But it found some consensus on a path forward.

When asked whether they favour free trade combined with programs to help affected workers, favour free trade without new support programs for workers, or oppose free trade, 77 per cent fell into the two pro-trade categories. Only 22 per cent said they opposed free trade.

In addition, more than three-quarters supported adding new labour and environmental standards to trade agreements to remove unfair advantages that sway investment away from the United States.

Only 38 per cent wanted to slow down or reverse international trade — but Republicans were split down the middle, at 50 per cent. That split has played out within the Trump cabinet, amid searing debates over what to do with NAFTA.

Donald Trump’s UN ambassador has just made clear which side she’s on.

Nikki Haley said that when she was South Carolina governor, people were overjoyed to have five international tire companies and three international auto companies in her state, saying, “Everyone wins” from those partnerships.

“I don’t see us tearing up any deals. If that was the case, we would have done it already,” she told a discussion at the George W. Bush Institute, when NAFTA came up.

“There’s nothing wrong with going back and looking at them. There’s nothing wrong with seeing if we can make them better.”

That pro-trade wing of the GOP is extremely powerful, the Pew numbers suggest.

The most politically engaged group of party supporters, and the most numerous, is what Pew calls “Core Conservative” — richer, more educated, ideological people whose opinions run closer to Haley’s. More than two-thirds of people in this group called global trade a good thing, versus barely one-third of people in the Country First category.

And this group carries disproportionate weight, according to Pew: Core Conservatives represent just 13 per cent of the public, but make up about 31 per cent of all Republicans, and 43 per cent of all politically engaged Republicans, single-handedly swaying such debates as climate change, where their view becomes the party view.

A third new survey also finds big support for worker-friendly trade policies.

Veteran Democrat pollster Stan Greenberg wrote a memo last week urging his party to get more involved in the NAFTA debate. His Democracy Corps polled 1,000 respondents and found the most convincing argument for changing NAFTA was that American workers are losing because it lacks enforceable labour and environmental standards, so companies shift jobs to low-cost Mexico.

Greenberg wrote: “Over 80 per cent of Trump voters and over 60 per cent of Clinton voters found that (to be) a convincing argument against the current NAFTA. But new terms to remedy this do not appear to be at the top of the Trump trade agenda.”

G20 promises fixes to economic ills, but little in way of concrete steps

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Leaders agreed to oppose protectionism, with Chinese President Xi Jinping urging major economies to drive growth through innovation, not just fiscal and monetary measures

Five things you should know before you start your work day on Sept. 13

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Why more than 700,000 Canadians should be watching the next Bank of Canada decision very closely. This story and more in your morning cheat sheet to the FP

IMF's Lagarde says Canada's setting a good economic example for the world

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Canada's fiscal policy and economic reforms set a good example for other countries, the IMF's managing director Christine Lagarde said

IMF head Christine Lagarde hopes Ottawa's stimulus plan 'goes viral'

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She also stressed that governments must do more to help those who have been negatively impacted by globalization

Diane Francis: Trump poised to undo much of what Davos has tried to accomplish

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Davos embodies a distinctly European”sensibility and Canadian governments love its multilateral vibe. But Donald Trump represents the pushback against much of what it has promoted

While Davos' political elite frets over Donald Trump, the corporate elite looks for profit

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While the political elite spent their time whining and dining over issues such as Brexit and Donald Trump, the corporate elite are figuring out how to profit
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