An all-Canadian electric concept car

I've often wondered why Canada doesn't have its own home-grown auto industry, and more specifically its own EV industry. If countries like Korea, India, Sweden, France, even Czechia, have their own vehicle design, manufacture and assembly industries, you'd think we could too, right?

After all, we've been beavering [sic] away building cars and trucks here for American, Japanese, Korean and European cars for decades, so we have the labour force and the expertise, and even quite a sizeable market. So, why no Saab, no Kia, no Skoda? No Tesla, no Togg (a homegrown EV designed and manufactured in Türkiye, of all places)?

Well, it turns out we kind of do (but only kind of). Project Arrow - named after the ill-fated Avro Arrow fighter jet, designed and built in Canada in the 1950s, and abandoned and destroyed in controversial circumstances - promises to be the first ever Canadian-made concept electric vehicle. And a good-looking beast it is too. 

With an innovative drive train, a 3D-printed chassis and a state-of-the-art navigation system, it caught many eyes when it was displayed at Canada's Pavillion at the COP28 climate conference in Dubai a couple of years ago. In 2026, it showcased its Vector and Borealis models at the Canadian International Auto Show in Toronto. The Vector is a sporty 650-horsepower crossover with a 550 km range. The Borealis is a driverless shuttle with a range of up to 1,500 km.

Project Arrow was initially launched in 2020 and spearheaded by Canada's Automative Parts Manufacturers Association (APMA), under the leadership of Flavio Volpe, using $12 million raised from the Canadian auto sector and $8 from all three levels of government. (Just for context, US EV maker Rivian had raised about US450 million in equity and debt by the time it brought its first vehicle to market 8 years ago.) Its original goal was not to launch a commercial vehicle, but to demonstrate the strength of Canada's EV supply chain to the world. As Mr. Volpe says, "With Project Arrow, Canada shows it has the technology and the people to do an 'all- Canadian' car". APMA originally figured it could have a compact SUV model Arrow available for a very reasonable $35,000 by 2029. 

In recent months, though, the industrial landscape has changed out of all recognition in Canada, specifically with the US's u-turn away from EVs under Donald Trump and the trade war that followed. Now, the Canadian auto sector is wondering whether it can survive at all. To a large extent, Canada is subject to the whims of the American auto industry and of Trump himself. There has been a pull-back from electric vehicles, mainly due to American influence, and several EV and battery projects in Canada have been shelved in favour of ICE vehicle production. 

Some industry insiders now believe that the only future for Canadian-built EVs is for military vehicles, and that is indeed the focus of Arrow 3.0. For one thing, it lines up with Canada's new increased NATO spending commitment of 5% of GDP, so there could well be development money available. But also EVs have untapped potential in the military sphere: they are quiet and harder to detect in stealth operations, can cut down on vulnerable fuel-resupply challenges, and they are able to power the various on-board sensors and electronics that are increasingly part of modern military defence. (Most of this is taken from an article by Stephen Baldwin for the Corporate Knight's magazine that does not seem to be available online.)

It seems ironic - or perhaps fitting, depending on how you look at it - that the Arrow car should go the same way as the original Avro Arrow plane. But maybe that's just the way the winds are blowing these days. Let's hope it's not dogged by the same kind of controversy as the Avro Arrow.

Doug Ford does not know more than the BoC

Our Glorious Ontario Leader Doug Ford seems to think he knows more about macroeconomics than the combined wisdom of the financial.egg-heads of the Bank of Canada. The BoC increased its key interest rate by 25 basis point to 2.5%, the first time it has done so since July 2023. This is still quite low, certainly compared to the USA's 3.9%, but there are those who object to any increase, as a matter of principle. 

Mr. Ford's comments on the rate hike were not subtle: "Raising interest rates right now is a massive mistake. Higher rates won't get oil moving through the Strait of Hormuz or lower tariffs on Canadian businsses." Well, duh. Neither will NOT changing interest rates for that matter. And I'm pretty sure the Bank of Canada is quite aware of the stakes here. But things are not as simple as Mr. Ford likes to make them appear.

Of course, the Bank did not take this step lightly. It is quite aware that the Canadian economy is struggling at the momemt, and that this move is likely to dampen consumer demand still further. But inflation continues to be stubbornly high - currently around 3.1% - and so well above the BoC's target of 2%, and this is the main reason for the interest rate hike. It has looked at all the ramifications and decided that on balance, this was the right move.

Doug Ford, however, apparently doesn't care about inflation. Much like Donald Trump, he only cares about the strength of the economy in the province he represents, lest voters decide to blame him for it.

Granted, this particular decision by the BoC was an especially fraught one, and there are those who believe the rate hike may have been premature, given the current climate of uncertainty and the ongoing weakness in the economy. But still, Mr. Ford, let the Bank of Canada do its job. It knows much more than you do about what makes the country's finances tick, and what's good for Canada and Ontario.

PSPP starting to get under the skin of the federal government (and everybody else)

Relations with Quebec have returned to the bad old days. Paul St-Pierre Plamondon ("PSPP") and his Parti Québécois have only been in power for a few days and already the temperature feels 20° cooler. PSPP is clearly finding any opportunity to get under the skin of the federal government, however accommodating they may be in return, and is aiming for maximum annoyance

First, he refused to take the oath of allegiance to the king, and then disrespected Quebec's Lieutenant-General by not even inviting her to - in fact, specifically asking her NOT to attend - the swearing-in ceremony for the new provincial government, a ceremony that she would normally preside over.

Now, he is whining that Quebec is being disrespected by not being invited to speak at a Canada-EU summit later this week, claiming that Ottawa is "refusing to consult Quebec and involve it in negotiations". Mr. St-Pierre Plamondon was in fact invited to the summit, but turned down the invitation because he was not invited to speak. He says he will not accept "falling into line" and being "reduced to the role of spectator".

PSPP seems to have an inflated view of his own importance, and does not care if he shows up Canada on an important international stage. This was a childish hissy fit on his part, and an embarrassment for Canada as the EU walked into essentially a domestic dispute made public by the Quebec Premier.

As Mark Carney points out, Quebec has in fact been consulted at least three times on the proposed agreement with the EU, even if PSPP himself was not in the room. The upcoming summit is even being held in Montreal, as agreed by St-Pierre Plamondon's predecessor as Premier, Christine Fréchette. 

These are, after all, negotiations at the federal, national level. Quebec, like the other provinces, will be involved and consulted as negotiations progress, although more as a courtesy than anything else.

I get it that the Parti Québécois was elected recently on an independence platform, even if most of the people who voted for them mainly did it as protest against the previous CAQ government and not necessarily for the independence piece (in fact, in spite of the independence piece), given that most Quebeckers still don't want to separate from Canada. But at this point, Quebec is just another province, due no special treatment. Get used to it, PSPP.

Now, he is probably just going through the motions, and merely wants to be seen to be opposing the federal government as often as possible. But this is going to get tired very quickly, both for the rest of Canada and the Federal government, not to mention for the Québécois people, most of whom probably don't want to become pariahs and personae non gratae within Canada.

Actually, only about 5% of Albertans want to separate

It's illuminating that only about a third (32%) of those who voted to pursue a separation referendum actually want to separate (this from an Abacus Data poll). The rest voted for Option 2 for other reasons, like "to get a better deal with Canada", "to send a message to Ottawa", or just because they feel they "deserve a direct say on separation" (i.e. just because). 

An Angus Reid poll yielded similar findings: 37% of people who voted for Option 2 (to pursue a separation referendum) actually want to separate; 60% just want to "send a message to Ottawa". 

This, then, puts support for actual separation in Alberta at between 8% and 8.5% among those who voted (24% times 32% or 37%), so between 160,000 and 170,000 out of the 2 million who actually voted. 

If we consider that voter turnout (about 2 million) was only 62% of the 3.2 million eligible voters, the picture becomes even more stark. It's a reasonable assumption that the vast majority of the surprisingly large number who didn't bother to vote were complaisant federalists and not separatists (who tend to be much more motivated). So, those voting for Alberta independence amounted to 160,000-170,000 out of 3.2 million, roughly 5%.

So, all this song and dance, and many millions spent on administration and advertising, just to assuage the egos of 5% of Albertans?

It certainly makes a mockery of the separatist leaders' claims of a groundswell of public opinion. In reality they are just a small fringe group of discontents, who might just as well move to the USA.

I've seen many articles expressing some variation on the idea that the vote should not be taken as an endorsement of the status quo, because 24% of Albertans voted to pursue a referendum on spearation, and much work remains to be done to placate the would-be separatists, yada, yada. I disagree. A 76%-24% vote is exactly that: a resounding endoresment of the status quo and a strong refutation of the minority view that Alberta should go it alone.

Is equalization really unfair to Alberta?

While we're all still exercised about Alberta separatism - hopefully that will fade soon, now we know that Albertans don't actually want to separate from Canada - let's look at one of the main irritants that the separatists bring up time and time again: equalization payments, and specifically how unfair Albertans think they are.

Many provinces have complained about equalization payments at one time or another - Newfoundland, Ontario, even Quebec - but there is nothing inherently unfair about the idea of equalization payments, and only the most churlish or egocentric Albertan would claim that (were they to even think about it, that is - many separatists that use unfair equalization payments as an arguing point are just repeating the claims of separatist agitators without even understanding what they are or how they work).

Equalization was brought into the Canadian federal system in the 1950s, although its formulation has been changed a few times over the years (the current formula was designed by by an Albertan head of an expert panel under an Albertan Prime Minister, Stephen Harper). It was enshrined in the Canadian Constitution in 1982. 

It aims to ensure that all Canadian provinces can provide reasonably comparable public services at reasonably comparable tax rates, based on each province's "fiscal capacity" (it's ability to raise its own revenues). So, money is taken from the richer provinces and reallocated to the poorer ones. We are, after all, just one country, and not all parts of it were blessed with natural resources and useful geography. 

Thus, mainly by virtue of their vast mineral wealth and booming economies, British Columbia, Alberta and Saskatchewan (the "have provinces") are net contributors; the other ("have-not") provinces are net recipients, to greater or lesser degrees (a little to Ontario and Newfoundland, a lot to Quebec, Manitoba, Nova Scotia, New Brunswick and PEI). Just as an aside, contributing provinces like Alberta don't "pay into" the equalization program as such, even if many separatists like to give that impression; it's a federal program funded by federal taxes on individuals and corporations.

Alberta's economy is the strongest in Canada; it doesn't need extra help. Using a complicated but consistent formula based on notional average tax rates, Alberta could raise over $17,000 per person, $4,000 than BC, $7,000 more than Quebec, and $10,000 more than PEI. The system is not perfect: it can be argued that it might encourage provinces to keep their taxes high, under-invest in resources, or undercharge for its electricity (a major bugbear of separatist Albertans). Butprovinces can still have their own distinctive economic policies, even if other provinces object to them, like Quebec's cheap electricity rates and its fracking ban, or Alberta's decision not to impose a sales tax like every other province.

Alberta may not like some elements of the equalization program, but the fact that there are regional winners and losers does not in itself make the program unfair to Alberta. That's just life, the way it is. Even with an equalization program, Alberta is still by far the richest province in Canada.

Whither Alberta (and Danielle Smith) now?

Alberta votes in its ten-question referendum in just a couple of days time. The conventional wisdom is that Albertans will vote overwhelmingly to stay in Canada, although that will only happen if the remain faction is not so complaisant that it forgets to vote.

Either way, commentators are already thinking about what will happen AFTER the vote. Premier Danielle Smith seems to think that everyone should just sigh "Ah, well" and move on, and has vowed never to revisit the issue on her watch. But that seems disingenuous. Separatist sentiment will continue to simmer regardless - it's where the far right in the province is currently hanging their Stetson hat, after previous forays into anti-vaccination policies, the "Freedom Convoy", parental rights and anti-trans sentiment. The referendum has, to some extent at least, legitimized the Alberta separatist movement, whatever its eventual outcome. And, much like with Brexit, the remain camp seem much less energized, urgent and motivated than the leavers, despite the existential nature of the issue, so anything could happen.

As in Quebec, Alberta separatism will not just dissipate into the ether after the referendum, but will continue to fester, at least until Donald Trump leaves power (if that ever happens) when it may see a resurgence. This is especially true if the independence vote achieves the possible-but-unlikely threshold of, say, 40%, which it could do with the addition of voters who don't really want to separate but who want to "send a message to Ottawa", or just a register a protest in some way.

Leading separatists have been very clear that they are not going away: "Regardless of what happens on Monday, we've already won ... we are going to build on our successes, build on our relationships", says one. Of course, this could just be a way of lowering expectations before a vote they will almost certainly lose. But it's also a declaration of intent for the future.

To some extent, the damage has already been done. It's quite possible that the very fact that a separation movement exists, and that it says it will continue to agitate in the future, will act as a dampener on investment in the province, particularly foreign investment. Much as happened in separatist-riven Quebec in the 1980s and 1990s, many companies will be loath to risk new investment money, and may even move out existing investments and representation. The separatists who say they want tot make Alberta stronger may just have weakened it for many years to come.

Meanwhile, the Alberta populace will remain deeply divided and irreconcilable. One interesting study looked at the attitudes of separatists and federalists towards each other. It found that, while most separatists did not have strong feelings either way about their federalist opponents, most federalists were quite bitterly resentful of the secessionists who have put their province at risk in this way. 

Whatever the outcome of the vote, Alberta may have soured and scared off many potential investors, and that's largely on Premier Smith for enabling the separatist vote as she has, regardless of her own opinions on the matter (if indeed you believe what she says). For some time now, she has been walking a very narrow tightrope between left and right (or, rather, between right and far right). 

The next provincial election is coming up in almost exactly a year's time. Most opinion polls put Ms. Smith and her United Conservative Party in a statistical dead heat with the opposition NDP, and her own personal populatity has dropped to new lows. Some think she might call an early snap election (colloquially known as "pulling an Eby") before her chances sour still further, although that could easily backfire (à la Eby). If the remain vote, which she professes to support, prevails, then the influential separatist faction within her own party would of course be baying for her removal (many already are). Or, who knows, maybe Alberta's far right will just latch onto another issue they see as worthy of their attention (and which may be easier to achieve).

It's tempting just to flip off would-be separatists, and tell them to grow up and get real. Or just move to Montana already (I can't get Frank Zappa's Montana out of my mind: "Movin' to Montana soon, gonna be a dental floss tycoon".)

Either way, Ms. Smith has made her bed and now must lie in it. Don't expect her to get much shut-eye, though.

UPDATE

Question 10 of the referendum -.whether Alberta should pursue separation - was defeated soundly, by an even greater margin than most people predicted (76%-24%). No big surprise there.

Separatists like Let Alberta Decide co-chair Keith Wilson, of course, can just double down on their "I think we've won" claim, regardless of the results. The more ambitious, like Jeffrey Rath of the Alberta Prosperity Society, can use it as a (rather wobbly) plank in their campaign to wrest control of the UCP from Danielle Smith, despite the fact that she handed the separatists a referendum on a platter, almost singlehandedly.

All of this may be just an indication of just how far their heads are up their arses. But it's more a reflection of how little the separatists had to lose in this referendum. If they had won, then their raison d'être could be considered fulfilled. Now that they've lost, they can still use the fact that a referendum was held at all as validation of their cause. You can out a positive spin on pretty much anything if you try! 

As for Danielle Smith, you could argue that she deliberately engineered this whole thing in order to shore up her own shaky position within a terminally divided UCP, by offering a sop to the substantial separatist element in her party. In the end, though, she is despised by the separatists for not doing enough, and disliked by the federalist contingent for risking the province and its future by enabling a referendum inntge first place. Her position is now shaker than ever, with both sides calling for her resignation, and her personal populatity has fallen to an all-time low in recent weeks.

She also may have damaged the UCP's chances in the next election. A Pollara poll taken between 2nd and 15th October shows the Alberta NDP with a four-point lead over the UCP. 

As a political strategy, then, Ms. Smith's initiative can only be described as a fiasco, a debacle, a washout, whatever epithet you prefer. You can't open Pandora's Box and then just say, "Can we move on?"

The other nine questions

We've heard a lot about the independence question in Alberta's upcoming referendum (October 19th). We've heard relatively little about the other nine questions on the ballot. What are they, and what do people need to know about them?

Question 1: Do you support the Government of Alberta taking increased control over immigration for the purposes of decreasing immigration to more sustainable levels, prioritizing economic migration, and giving Albertans first priority on new employment opportunities?

This four-part question is one of the more confusing ones. Are people voting on the first part, all of the parts, any of the parts? I guess they are (deliberately) leaving their options open. Alberta is trying to achieve what Quebec already has, although Quebec's circumstances were (and are) quite different. In particular, it's not clear what "sustainable" means in this context, nor even who would qualify as an "Albertan". This also comes at a time when immigration into Alberta is nose-diving after a surge from 2022-2024.

Question 2: Do you support the Government of Alberta introducing a law mandating that only Canadian citizens, permanent residents and individuals with an Alberta-approved immigration status will be eligible for provincially-funded programs, such as health care, education and other social services?

What does "Alberta-approved" mean here? What criteria will be set for "approval"? This could represent a drastic change, as currently all temporary residents are eligible for these services. 

Question 3: Assuming that all Canadian citizens and permanent residents continue to qualify for social support programs as they do now, do you support the Government of Alberta introducing a law requiring all individuals with a non permanent legal immigration status to reside in Alberta for at least 12 months before qualifying for any provincially-funded social support services?

Which social support programs will be off-limits to new temporary residents? All of them? The government's explanatory website suggests that this actually means childcare subsidies, student aid, income supports and other benefits, but not health care or education - this is far from clear. Premier Smith has previously indicated that temporary residents cost the public system $1 billion for health care and education, but this is disputed by some experts, and ignores the fact that many immigrants actually arrive in Canada healthier than many Canadian-born residents, and use fewer health resources.

Question 4: Assuming that all Canadian citizens and permanent residents continue to qualify for public health care and education as they do now, do you support the Government of Alberta charging a reasonable fee or premium to individuals with a non-permanent immigration status living in Alberta for their and their family's use of the health care and immigration systems?

Yet another question aimed at making temporary residents unwelcome in Alberta, this question, as with the others, does not make it clear whether it applies to current temporary residents or just future ones. And what exactly does "a reasonable fee or premium" mean? (A figure of $1,900 for healthcare alone has been posited, although who knows where that came from. Also, when would this (and any other potential changes) come into force? Again, rumour has it that it might only start after the next election, which is scheduled for October 2027 (and presumably only if the UCP actually wins that election).

Question 5: Do you support the Government of Alberta introducing a law requiring individuals to provide proof of citizenship, such as a passport, birth certificate or citizenship card, to vote in an Alberta election?

This one presumably WOULD come into force before the next election! Elections Alberta already requires proof of address and accepts any of 50 different forms of identification, so it's not clear what problem this measure is supposed to address. The electoral agency has reported only four instances of ineligible voters in the last ten years, and it already verifies voters' citizenship when individuals are added to the electoral roll. Anything more seems redundant.

Question 6: Do you support the Government of Alberta working with the governments of other willing provinces to amend the Canadian Constitution to have provincial governments, and not the federal government, select the justices appointed to provincial King's Bench and Appeal courts?

Ms. Smith seems to think that Alberta has "distinct legal traditions", even though they are really just the same as those of other provinces. As with all other provinces, the current system appoints judges through a judicial advisory committee, which has representatives from the province as well as from the federal government. Plus, any change to the Canadian Constitution would require the agreement of at least seven provincial legislatures covering at least 50% of the country's population, not just "other willing provinces". So, not going to happen.

Question 7: Do you support the Government of Alberta working with the governments of other willing provinces to amend the Canadian Constitution to abolish the unelected federal Senate?

The allocation of Senate seats between provinces is admittedly unrepresentative for historical reasons, and the western provinces (BC, Alberta, Saskatchewan and Manitoba) are under-represented. The solution to this, however, is not to abolish the Senate but to reform it. In addition to the same requirement to even open the Constitution noted above, the Senate could not be abolished without the  agreement of all ten provinces. Not going to happen.

Question 8: Do you support the Government of Alberta working with the governments of other willing provinces to amend the Canadian Constitution to allow provinces to opt out of federal programs that intrude on provincial jurisdiction such as health care, education and social services, without a province losing any of the associated federal funding for use in its social programs?

Essentially, Alberta to have its cake and eat it. It wants to continue to receive the billions of dollars in federal funding to help run its programs, but is unwilling to accept the strings attached (e.g. complying with federal laws). If a province is not willing to accept the terms of the transfers, then why should they get the transfers? It's a bit like taking out a bank loan and refusing to pay the interest. Plus, to even open the Canadian Constitution ... yada, yada.

Question 9: Do you support the Government of Alberta working with the governments of other willing provinces to amend the Canadian Constitution to better protect provincial rights from federal interference by giving a province's laws dealing with provincial or shared areas of constitutional jurisdiction priority over federal laws when the province's and federal laws conflict?

This would be a dramatic reshaping of the country's constitutional order, and is an extension, or a "rephrasing", of Smith's signature Alberta Sovereignty Within A United Canada Act of 2022, much of which remains to be tested for legality and constitutionality. Federal legislation applies around the country, almost by definition, and that is unlikely to ever change (nor should it). The Constitution is very clear on what is federal jurisdiction and what is provincial. In practice, the occasions on which federal and provincial laws clash are few and far between, and that is especially so with the current federal administration. Plus, to even open ... yada, yada.

So, lots of long, wordy, confusing questions about immigration and constitutionality, all stemming from Alberta's constant feelings of insecurity, grievance and victimization. (None of these questions are binding in any way, mind you, however the voting might go.)

As Mark Carney said, just yesterday, "No to the Nine!" (Or "decline the nine", if you prefer.)

Revelations of separatist leaders' deals with America rattles Albertans

As Quebec votes in a separatist government (albeit only a minority government, with a much weaker mandate than was widely expected), Alberta's secession movement also receives another set-back.

Revelations in the Globe and Mail show that some major Alberta separatist leaders have been cozying up to the US Republican Party, which, given current relations between Canada and the USA, has many Albertans pretty worried and upset.

The Globe's report details how, unbeknown to most rank-and-file would-be separatists, movement leaders have met with Republican representatives in Washington and in Calgary and have even discussed potential deals granting the US access to Alberta's land, water, oil and precious metals in return for American assistance in their secession plans. 

This is a bridge too far from most Albertans, and organizations like the Alberta Prosperity Project and Stay Free Alberta are desperately trying to limit the damage of the revelations. Some Albertans - less than a quarter, according to most polls - have a beef with Canada (or they think they do), and believe it is is Alberta's interests, in one way or another, to separate. Hardly any Albertans want to become the 51st state of America.

The wacky world of BC politics

We sometimes think that Ontario provincial politics is pretty wacky, but it's certainly got nothing on the strange goings-on in British Columbia politics. Stay with me here.

The BC Liberals dominated BC politics from more than a decade, from 2001 to 2017, when there left-wing NDP under John Horgan and then David Eby came to power, and the NDP has domination ever since. The BC Conservative Party spent the 1990s, 2000s and 2010s in the political wilderness, with zero seats.

In 2022, former BC Liberal cabinet minister John Rustad was booted out of the party for questioning climate science. He crossed the floor and joined the Conservative Party in 2023, soon becoming party leader (he was the only Conservative with a seat in parliament for one thing). The Liberal Party basically disbanded and renamed itself BC United, although it was short-lived.

Rustad was initially lauded for growing the BC Conservatives from less than 2% of the vote to Official Opposition status (mind you, they still lost by a long chalk to David Eby's NDP). By 2025, though, Rustad's abrasive style made him very unpopular. Several Conservative MPs defected, and Rustad eventually resigned his leadership amid a party revolt.

In May 2026, Kerry-Lynne Findlay took over the leadership of the Conservatives, but she was even more unpopular and scandal-prone than Rustad. Conservative MP after Conservative MP resigned, many of them joining a new party, CentreBC, looking to distance themselves from Findlay's hard right stance, and Findlay herself ejected a few more. With the party in freefall, Findlay eventually resigned as leader on 20 September 2026.

With an election cynically called by Eby for 24 October to take advantage of the Conservative disarray, the BC Conservative Party is now desperately trying to reinvent itself. Many (but not all) of those who defected or were ejected are now moving back, rather shamefacedly, to the Conservative Party under new leader Lorne Doerksen.

And now, just for added confusion, the ex-leader of the BC Green Party, Andrew Weaver, will be running in the upcoming election ... for the conservative CentreBC party! Wacky doesn't even cover it!

UPDATE

Just to cap it all off, David Eby lost the snap election he called against most people's cautions, creating all sorts of firsts (first time a BC leader has lost a snap election, first time an NDP majority has flipped to the Conservatives, first time the BC Conservatives have won a majority in almost 100 years, etc). Eby promptly resigned.

Canada looks to the east to replace the south

Canada's - or, more specifically, Mark Carney's - push for closer relations with the European Union makes perfect sense given what is happening with Canada-US trade relations.

While it's still not clear what "associate membership" of the EU might mean, or whether the 28-member bloc would even agree to what Ursula von der Leyen is proposing, Canada could certainly do a lot worse than to align itself closer with the EU (and some of the more civilized parts of Asia, Australasia, etc).

But wait, doesn't Canada already have a free trade agreement with the European Union? Well, kind of. The EU-Canada Comprehensive Economic and Trade Agreement, thankfully abbreviated to CETA, was officially signed in October 2016, and entered into "provisional application" in September 2017. CETA eliminates duties on 99% of all tariff lines between the EU and Canada.

Which begs the question of what "provisional application" actually means. The full treaty required the official ratification of all 27 EU member states, which, as you might imagine, is a difficult thing to achieve. Currently, 17 of the 27 EU countries have ratified the agreement, with 10 countries still holding out nearly a decade later: Belgium, Bulgaria, Cyprus, France, Greece, Hungary, Ireland, Italy, Poland and Slovenia. Of these, France and Italy are probably the most important. Opposition by these hold-out countries largely focusses on: the dispute settlement system; its impact on national sovereignty, agricultural and commercial interests; food safety; consumer and worker rights; public services; and environmental and sustainable development.

Notwithstanding those reservations, the agreement is effectively in force now, and has been for the last decade. So, it's hard to know what else Canada wants from the EU (and vice versa). Ms. Von der Leyen has talked about an "Alliance for the Future", covering defence, energy, technology, critical minerals and the Arctic. This clearly goes much further than the current trade agreement. Carney has also talked about a "unique alliance" that extends beyond a conventional free trade deal.

But Mr. Carney has stressed that he is not looking to become a full member of the EU, with all the incumbent duties and costs (and some potential loss of national sovereignty and independence). The "associate member" status - which currently does not exist - presumably reflects this compromise.

Either way, it seems to be annoying the hell out of Donald Trump, so that's something. He calls it a "hostile act" done with "bad intentions" (nothing is "done" as yet), and is clearly rattled by the project of Canada taking its business and its loyalties elsewhere.

Is privatizing Canada's airports a good idea?

Mark Carney's latest announcement is about privatizing Canada's four biggest airports: Toronto, Montreal, Vancouver and Calgary. Under this plan, the federal government would retain ownership of the underlying land and assets, but the day-to-day operation of the airports would be opened up to private investors.

The theory is that airline customers would benefit from improved services and infrastructure, and the government would receive a large cash influx which can then be used to improve some of the smaller regional airports around the country, which are currently underfunded. It's being presented as a win-win scenario.

Seem too good to be true? Well, maybe. But studies do seem to show that, when airports are privatized, they do tend to be glowed up, the number of routes flying into them increases (including from low-cost carriers), and cancellations go down, soften drastically. These improvements are particularly noticeable where airports are acquired by private equity funds.

Is this a slam-dunk, then? Well, Canada's case is definitely not the same as parts of Europe and Asia, where distance are smaller and populations denser. But, when Australia privatized its airports, it too saw substantial improvements, and Australia is much more similar to Canada in its geography and demographics.

Some costs will definitely go up, though, for ticketing, parking and food. Private companies expect a profit after all, and investment funds in particular expect big profits (8-12%). Experience shows that, after privatization, most airports will put a price on baggage carts, for example, and pick-ups and drop-offs by private vehicles (and, by extension, ride-hailing services) will be charged sometimes quite onerous fees. 

The Canadian Labour Congress has pointed out that Australia's experience resulted in significantly higher fees imposed on travellers, as well as some substantial job losses as airports look to economize and rationalize their operations. Also, while the government may benefit from a one-time infusion of cash, it will be giving up a steady public income of around $525 million a year from rents and other fees.

The International Air Transport Association, which represents 370 of the world's airlines, has also registered its opposition to Mr. Carney's privatization plan, on the grounds that experience shows that the increased costs will be passed on to airlines, which will in turn Kass those costs on to travellers, so air fares will go up. Carney says that "the evidence shows travel costs go down over time", but that is not borne out by the recent experiences of Australia and Britain.

So, slam-dunk may be an exaggeration, but some advantages do exist. Whether they outweigh the drawbacks depends very much on your point of view. But you should definitely be prepared for higher air fares.

International trade is weird

As expected, Donald Trump has levied some more tariffs on Canada, in response to Canada's counter-tariffs to Trump's earlier tariffs. I know, it sounds like a kid's game, doesn't it?

The new tariffs, generally speaking, are in the sectors of dairy products, alcoholic beverages and motorcycles, a pretty random-seeming mixed bag, although I'm sure some thought has gone into them (albeit not by Trump).

When you think about it, though, some of the products are pretty surprising. "Molasses products, including invert and cane molasses"? We export molasses to the USA? We don't have any sugar production, apart from maybe final refining. Why are we exporting molasses, and to the US of all places?

Ditto rum and tequila. Don't we import them from Mexico, and probably from the USA? What are we doing exporting them to America?

And, for that matter, motorcycles. We export motorcycles to the land of the Harley Davidson?

International trade is weird.

If there are more sanctions to announce, why weren't they announced before?

Every now and then, I read about a new sanction that is being brought to bear on one of the world's pariah states. The latest such is Canada, France and the UK are sanctioning Israel in a small way by banning the import of goods from the illegal settlements in the occupied West Bank. 

My first thought was "What? We buy things from the occupied West Bank? They can actually grow things there?" My second thought, though, was "Why the hell did we not impose these sanctions before?"

It's the same with Russia. Canada and most of the civilized Western world has imposed various sanctions on Russia since its invasion, and its ongoing bombing, of Ukraine. As recently as June of this year - four-and-a-half years into the war - Canada imposed new sanctions on 162 "people, entities and vessels". 

Which raises the questions of "why now?" If these are legitimate sanction targets in relation to Russia's illegal war, why were they not sanctioned four years ago? Why were the earlier sanctions not designed to include all possible targets, for maximum effect? Why wait until now to announce a few more piecemeal sanctions? Was it just for the sake of having something to announce, to be seen to be doing something?

It does seem to be more about playing politics than a serious attempt to bring about a halt to the war. And I'm not saying that only Canada is guilty of this - all countries seem to be doing it.

Extending gas tax relief is a cynical exercise in populism

The Carney government, which for the longest time liked to call itself "Canada's new government" in order to distance it from the old Trudeau-led Liberal government, continues to show just how distant it is from Trudeau-era philosophies, particularly where the environment is concerned.

Mr. Carney's latest transgression is to extend the tax cut on gasoline, aviation fuel and diesel that it brought in in April of this year, and which was supposed to die an ignominious death this week. Now we are stuck with it until the end of March 2027 at least.

It's a conservative-inspired populist sop, advertised as a cost-of-living/affordability measure designed to help poorer people cope with the increased costs caused by Trump's war in Iraq.

But it takes a good chunk of government money to finance this kind of feel-good measure.. Estimates are that the tax cut will cost the government (and therefore the country) about $5.3 billion. That's more than the entire annual budget of the Correctional Services of Canada, more than the Department of Agriculture's annual budget, and the Department of Natural Resources'. It's more than what Ottawa plans to invest in its critical minerals strategy, slightly less than is budgeted for "trade diversification and infrastructure strategies" over five years, and a bit less than its investment in defence industrial strategy over five years.

You get the idea: it's a lot of money. And this is not some kind of tax reform measure, funded by tax increases or spending cuts elsewhere. This is just out-of-pocket spending that the country can ill afford. It goes straight on to our deficit and our national debt. It is lowering the cost of filling up your gas-guzzler SUV by borrowing and topping up the national debt. 

It works like a carbon tax in reverse: the more you drive, the more you save. If you can't afford a car and use public transit, or if you are environmentally responsible and drive an electric car (like me), you get no benefit at all, but pay for the debt servicing costs anyway out of your taxes.

This is no less cynical than the "temporary" gas tax cut Ontario Premier Doug Ford instituted back in 2022, which of course is now permanent. It is a similarly cynical populist move, just on a bigger scale.

There was a time when Mark Carney was a committed environmentalist, particularly active on climate change issues, but those days are long gone. This move will enable an increase in fossil fuel use, and an increase in greenhouse gas emissions. Carney knows that, and went ahead anyway, because he likes the power and wants to stay as Prime Minister. Of course, he would say, like Doug Ford, that he is saving the man in the street money, but it will certainly not trickle down to the poorest of the poor. 

And anyway, at what cost to the environment does it come. It's interesting that it was announced at the same time as the government issued (rather secretively) its latest Changing Climate Report, which concludes that Canadians are feeling the effects of climate change - from floods, wildfires and heatwaves to vanishing glaciers and melting permafrost - much more, and much more seriously, than projected just a decade ago, and that those trends are likely to be much more pronounced in the future. Since 1970, it notes, Canada has warmed nearly twice every as fast as the global average, and the Canadian Arctic three times as fast.

The report makes grim reading. And the Prime Minister's response? Let's just make it worse.

"Your entire nation has a lower GDP than Texas"

"Your entire nation has a lower GDP than Texas". Not Donald Trump this time, but US Representative Brandon Gill of, well, Texas.

And his point? Er, not sure.

Canada goose 1 : American Eagle 0

I should know better than to respond to Trump's nocturnal ramblings on social media. But worth mentioning that I already dealt with this one long before it even happened.

In this episode... Trump has cherry-picked part of a photo sequence by a Canadian photographer of an encounter in Burlington, Ontario between a bald eagle (symbol of America) and a Canada goose (kind of a symbol of Canada, for our sins).

The photo seems to show the eagle dominating and savaging the goose. The rest of the photo sequence, though, shows very different outcome: after a protracted scuffle, the goose survives, rallies and threatens back against the shocked eagle. As I posted many months earlier, a different cherry-picked photo from the same sequence shows the goose rampant and a rather sorry-looking eagle.

Be careful with your source material Mr. Trump (or Ms. Harp, or whoever comes up with this guff).

Does Canada have any alternatives to retaliatory tariffs?

As Canada invokes dollar-for-dollar retaliatory tariffs on the USA, one can't help but lament how Canada is getting dragged into Trump's own silliness. On both sides of the border, prices will go up, plants will close, and jobs will be lost. As one journalist put it, this is "fighting stupid with stupid". Protesting that "we didn't start it" doesn't change that.

I mean, think about it: Canada now has tariffs on the same exports to the US as the US has tariffs on its exports to Canada. How daft is that? We may as well just keep those products and use them here in Canada, rather than making them more expensive, exporting them to the USA, and then importing the same products back again from the USA (after they have made them more expensive). Franz Kafka would have had a field day with this stuff.

There again, what choice do we have? Doing nothing would signal surrender, and give Trump carte blanche to extend or ramp up his tariffs. Hardly anyone is advocating that.

Some - including the Alberta Federation of Labour, much to many people's surprise - have suggested levying export taxes on our exports to the US. After all, that would put the financial burden on American importers, not Canadian exporters, right? The problem is, export  taxes raise the prices for importers, who would probably then look elsewhere for their imports. It would reduce the attractiveness of, and demand for, Canadian products, and probably result in scaled-back production and job layoffs. 

Predictably, others - the Canadian Association of Petroleum Producers, for one - have strongly counselled against such a move. Oh, and export taxes are also explicitly prohibited under the CUSMA/USCMA agreement with the US (although, arguably, Trump has flouted the spirit if not the letter of that agreement many times).

Which leaves us with retaliatory tariffs, or some other non-tariff option. BC Premier David Eby has called on Mr. Carney to consider other strategies, like reconsidering the plan to buy American F-35 fighter jets, and to levy export taxes on exports of coal to the US, but only in addition to retaliatory tariffs, which he says he fully supports.

Canada nonplussed by Trump's threat to change Lake Ontario name

Family overseas are asking us how Canadians feel about Donald Trump threatening to rename Lake Ontario as Lake America. (Could he not think of anything more creative?) Well, the word that springs to mind is "nonplussed". Generally speaking, we have learned to ignore Trump's bloviations and his childish outbursts as much as possible.

Besides, he just can't do it. Even a US president can't unilaterally change the name of a bi-national lake. Any change he proposes (assuming he is serious, which is far from clear) would only apply to US federal government publications and maps. The current name is recognized internationally and appears in federal legislation on both sides of the border.

Lake Ontario - an Indigenous name that predates either country, incidentally - is governed jointly by Canada and the USA, through a whole series of treaties, commissions and bi-national agreements. To change the name, Trump would first need to go through the US Board on Geographical Names. Assuming he could cajole, browbeat and threaten them to go along with his childish prank, it would then need to be ratified by the Geographical Names Board of Canada and Ontario's Ministry of Natural Resources and Forestry and Indigenous Communities, which is consulted on culturally significant names.

So, not going to happen. 

Mr. Trump may be able to force the US government to change the name on its own maps and reports. But then, US government maps will be wrong and everyone else's will be right. How does that constitute a win, even by Trump's warped standards? You can just imagine government functionaries rolling their eyes, as they consider the prospect of all that extra work just to accommodate another Trump hissy fit.

Canada-US trade talks fall through

Well, the Canada-USA trade talks fell apart at the eleventh-plus hour.

Prime Minister Mark Carney blamed the Americans for "last-minute changes in US proposed terms [that] were unfair, uneconomic and called into question the reliability of any deal". That sounds about right from past experience.

US Trade Representative Jamieson Greer, of course, blamed the Canadians for "new demands and walk-backs of other commitments by Canada [that] have upended the careful balance reached in the past days". That sounds less convincing.

So, the 50% Section 338 tariffs on about $28 billion of Canada's exports to the US (about 5% of total exports) are set to go ahead forthwith. That sounds pretty bad, but an RBC analysis estimates the fallout at just 0.4% of Canada's GDP, and a separate Capital Economics study puts it at 0.6% of GDP. So, not good, but not disastrous, in the scheme of things. The burden would not fall evenly on the economy, though, with apparel and electrical goods being most badly affected (20% of production and jobs in those sectors could be hurt).

Canada has vowed to retaliate "dollar for dollar", Trump has vowed to up the ante should Canada retaliate, and we now have an all-out open-ended trade war. And we haven't even started negotiation on the renewal or otherwise of the CUSMA/USMCA free trade agreement!

But, I'll tell you what, it actually pretty good to be standing up to the bully to our south. The only other country that has stood up for itself in this way is China. Although, granted we are much more in a David and Goliath situation.

Elbows up, anyone?

Canada probably needs to retaliate against US tariffs, even if it's self-defeating

Just hours before the next batch of Trump tariffs almost certainly comes into force, affecting a long list of Canada-produced items, there is still talk of retaliatory Canadian tariffs. The question is: why?

Despite what Donald Trump wants you to think, tariffs are a tax on the levying country. Everyone else understands that. So, why would we want to do that to our own hard-pressed consumers and businesses?

The answer apparently, has nothing to do with economics. Economically, it makes no sense for us to levy counter-tariffs, even targeted tariffs. But not to retaliate would send a bad political message, and open up the possibility of further tariffs down the road, imposed apparently with impunity.

I get it: doing nothing implies weakness, and Trump punishes weakness. But I'm not totally convinced that responding with force is necessarily going to deter future escalations.  Retaliation or no retaliation, further threats and bullying is always a possibility with Trump, who is never satisfied.

Perhaps even more pertinent, though, is the matter of optics for Mark Carney and his Liberal government. Carney was explicitly elected on a platform of standing up to Trump, of not rolling over, and the polls are clear in their portrayal of Canadians as expecting some show of strength, some "elbows up". Carney's responses to Trump so far have been distinctly mixed, and many Canadians think he has already gone too far down the road of appeasement. So, a strong response is particularly important this time. And, for most Canadians, that means retaliation, however ill-advised.