On Global Trade & Investment


Published Three Times a Week By

The Global Business Dialogue, Inc.

Washington, DC   Tel: 202-463-5074



No. 74  of 2014 

FRIDAY, OCTOBER 31, 2014     



Filed from Portland, Oregon  


Click here for Wednesday's quote from
Michael Froman's Foreign Affairs Article

"In a competitive global environment, every advantage counts."

Perrin Beatty
October 19, 2014 (publication date)
Perrin Beatty is the president and CEO of The Canadian Chamber of Commerce, and he wants Canada to become a trading hub for China's renminbi or yuan.  Why? Because China is Canada's second largest and fastest growing trading partner, because the renminbi ranks second among the world's most often used currencies, and because having a renminbi hub in Canada will give Canada and Canadian companies a competitive advantage.  More on all of that in a moment.

NOVEMBER 2014.  First, a word about November.  It begins tomorrow.  And it is shaping up to be a month in which the whole world may seem to be pivoting toward Asia.  From the 5th to the 11th of November, China will host this year's concluding APEC meetings, with the Leaders' Meeting scheduled for the 10th and the 11th.   
After that the action shifts to Brisbane - the capital of Queensland, Australia, on the Coral Sea.  That will be the site for this year's G20 summit and related meetings from November 13 through the 16th. 

There will be no breakthrough in the Trans Pacific Partnership negotiations this month - Ambassador Froman has said as much - but with so many heads of state involved in these two very important events, there are bound to be big announcements of one sort or another.  What will they be?  We are not sure.

An APEC Anti-Corruption Agreement.  The press today is suggesting there may be something on that.

An FTA between Australia and China.  They have been negotiating for nine years, and November 2014 could be the month they wrap it up.

A Renminbi Hub for Canada.  If Prime Minister Harper were to return to Ottawa with that in his pocket, he would win high praise from Canada's business community for bringing home the bacon. 

MR. HARPER'S TRAVEL.  Prime Minister Harper is going to China, but his plans have changed somewhat.  He announced this past Monday that he would not be attending the APEC meetings, as he is determined to be in Canada for the Remembrance Day ceremonies on November 11th.  That hasn't changed, but Mr. Harper will fly to China next week and will be there for some of the APEC events.  According to the statement his office put out today, the prime minister will be in China from the 5th through the 10th of November.  

A RENMINBI HUB IN CANADA.  Clearly Mr. Harper and his Chinese hosts will have a lot to talk about and just possibly one of those things might be an RMB hub in Canada.  The hope that that might be the case was the motivation for the report issued recently by The Canadian Chamber of Commerce on "Doing More Business with China: Why Canada Needs A Renminbi Hub."  

The following quotes capture some of the argument of that report:

"What is a renminbi hub? ... It is a centre that is authorized by China's central bank to complete RMB transactions."

"The main immediate benefit is a potential boost in sales and profits for Canadian companies doing business in China.  ... A recent survey by HSBC showed that 55% of Chinese businesses said they would offer discounts up to 5 percent to their trading partners for RMB denominated transactions."  

"Because the bulk of Canadian exports to China are in highly competitive commodities with low profit margins, such as wood products, iron ore and coal, selling these goods in RMB can give Canadian companies the edge to beat out international competition."  And because there is currently no RMB hub in the Americas:

"Canadian banks would have a significant first mover advantage in the Americas potentially capturing the market for RMB in the U.S. and Latin America."

We have built this entry partly around anticipated November developments.  We have no idea whether a renminbi hub for Canada is something that will move forward in November or not.  We suspect, though, that  it will happen sooner rather than later.
In terms of U.S. trade policy, it strikes us that there are two lessons here.  The first is that America's emphasis on the unfairness of competing in a world with an "undervalued" renminbi is way too narrow a focus for a discussion of that currency.   The second is that, laudable though the quest for the level playing field may be, a country that is serious about its role in the global economy needs to focus on competing in the world as it is, not as one might like it to be. American companies do that all the time, but for the American government, it is difficult.

Finally, the changing of Prime Minister Harper's travel plans is a reminder of all of the different threads that are intertwined in all of our actions, especially those of national leaders.  "The eleventh hour of the eleventh day of the eleventh month" of 1918 ended a war that claimed some 37 million casualties, dead and wounded.  Even after almost 100 years it would be worth commemorating.  But of course it wasn't the end.  Not by a long shot.  Prime Minister Harper is painfully aware of that, what with two terrorists attacks in the last couple of weeks.  The first was in Saint-Jean-sur-Richelieu in Quebec on October 20 and the second, which killed a ceremonial guard at the National War Memorial in Ottawa, came on October 22. 

Prime Minister Harper has set himself a punishing travel schedule.  But of course he wants to be home for this Remembrance Day. 
Canadian Chamber Calls for RMB Trading Hub is a link to the Financial Post Article that was the source for today's featured quote.

Doing More Business with China is a link to the Canadian Chamber of Commerce Report highlighted above.

Off to China is a link to the statement on the Canadian Government website with information on the Prime Minister's forthcoming trip to China.

Terrorist Attacks in Canada is a Wikipedia article on the two recent attacks mentioned above.

Anti-Corruption Accord takes you to a Reuter's article on China's goal for an anti-corruption agreement at the APEC meetings in Beijing.

Australian Dairy Farmers Hope is an article on the FTA between China and Australia, which some hope will be signed next month.

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2014 The Global Business Dialogue, Inc.

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Washington, DC   20036

Tel: (202) 463-5074

R. K. Morris, Editor