Ontario Policy Update

Nov 1, 2018

Ontario Cabinet Shuffle. On Monday, November 5th, Premier Ford announced a cabinet shuffle triggered by the resignation of Economic Development and Trade Minister Jim Wilson. Community Safety and Corrections Minister Michael Tibollo (Vaughan-Woodbridge) is appointed as the new minister for Tourism, Culture, and Sport, with Minister Sylvia Jones (Dufferin-Caledon) taking over as Solicitor General. Also swapping portfolios are Ministers Jeff Yurek (Elgin-Middlesex-London) and John Yakabuski (Renfrew-Nipissing-Pembroke), the two assuming duties at Ministry of Transportation and the Ministry of Natural Resources respectively.

Government House Leader Todd Smith (Bay of Quinte) will fill Minister Wilson’s EDT position, while Bill Walker (Bruce-Grey-Owen Sound) will relinquish his chief government whip role for that of Minister of Government and Consumer Services.

Last week Minister Tibollo’s chief-of-staff, Ken Bednarek, resigned, which prompted a mini-shuffle of top political staff. Luca Bucci, former Transportation Minister Yakabuski’s chief-of-staff, was re-assigned as Tibollo’s chief; Municipal Affairs Minister Clark’s chief-of-staff, Dan Jacobs, was re-assigned as former Natural Resources Minister Yakabuski’s new chief; and Derek O’Toole from the Premier’s Office has been temporarily re-assigned as Clark’s interim chief-of-staff.

Ontario Fall Economic Statement. Finance Minister Vic Fedeli announced that the Government will deliver a Fall Economic Statement on November 15th. No details yet on what might be included in the fiscal statement, but it is expected to outline plans for ongoing government austerity to address an identified $15 billion deficit. One of the government’s election platforms included a pledge to cut $6 billion in government spending.

It is anticipated that long-standing expectations regarding government funding will be severely disrupted as the provincial government considers private sourcing strategies and looks to industry to step up and take on a greater leadership role in advancing economic growth. Past recipients of government funding will be wise to rethink sustainable funding strategies and place greater emphasis on private partnerships.

This new environment suggests an opportunity for those private sector interests prepared to fill the leadership gap to also help shape the narrative and implementation with respect to the government’s agenda.

CPTPP Ratification. As of October 31st, six signatory countries (Japan, Mexico, New Zealand, Singapore, Canada, and Australia) had ratified the CPTPP, allowing the agreement to come into force within 60 days (or December 30th, 2018). The remaining CPTPP signatories — Brunei, Chile, Malaysia, Peru and Vietnam — will not benefit or be bound by the agreement’s obligations until their domestic ratification processes are completed. Vietnam is expected to ratify later in November.

The 11 signatories of the CPTPP represent about 13% of the world's GDP.

It is significant that Canada be among the first countries to implement the agreement, since the market access advantages of the CPTPP only apply to those countries which have ratified once the agreement comes into effect. Significantly, this offers Canadian exporters a major advantage over US competitors, given that the US pulled out of the TPP in early 2017.

Canadian exporters could benefit in excess of $428 million according to the chief economist at Global Affairs Canada. More than three-quarters of that $338 million — is calculated to result from tariff reductions in Japan. Being party to the agreement when it first comes into force allows Canadian beef and pork exporters preferential market access to the lucrative Japanese market, which in the process displaces US exports facing higher tariffs. In Japan, for example, US beef exporters will continue to be subject to 38.5% tariffs.

Canadian exporters are expected to acquire market share at the expense of their US competition during implementation of the preferential CPTPPP market access terms. Once lost, that market share will prove difficult for American companies to regain once the US re-establishes trade relations in the region (either bilaterally or by rejoining the CPTPP).

Supply Management (SM) Working Groups. On October 29th, the Federal Government announced a formal process for consulting with the supplymanaged industries on strategies for mitigating the impacts of trade concessions made under the CPTPP and USMCA negotiations.

AAFC Minister MacAulay announced a new working group for poultry and egg producers and processors. At the same time, Minister MacAulay announced two separate dairy working groups to undertake the following:

  • develop mitigation strategies for dairy producers and processors to support short-term adjustment to the more immediate impacts of trade concessions under the USMCA and CPTPP (estimated to take about two 1 months); and,
  • chart a path forward to support dairy sector innovation and growth (estimated to take about six to eight months).

Details on membership, timelines and processes for each of these new SM working groups have yet to be released.