Archives for September 1, 2019

Consumer advocates say a rare consensus is forming among the major political parties ahead of the federal election that Canadians need protecting from gouging by the country’s big telecom companies.

It’s being called phone-bill populism, and it could be a make-or-break issue for the parties as they head toward the Oct. 21 vote.

Allan Thompson hears about it constantly as he knocks on doors in communities across the Ontario riding of Huron-Bruce, where he’s running as a Liberal candidate.

Seniors are most likely to raise the issue, Thompson says, as they give him an earful about the ever-rising cost of living in general.

“But then (seniors) are also the most likely to be at home when I knock,” he said.

Even before the official campaigning begins, all the major parties are pledging to find ways of curbing increases to telecom rates.

The New Democrats under Jagmeet Singh laid out their plan for reducing wireless and internet-service rates, announcing in June they would impose a “price cap” on monthly bills that they estimated will save households about $10 a month for each service.

The NDP plan would see rates matched to an average across the 36 countries that make up the Organization for Economic Co-operation and Development (OECD), the party said.

Recent media reports have indicated the Trudeau Liberals are preparing a campaign pledge to reduce cellphone and internet costs either through a cap on monthly bills or by requiring major service providers to offer mobile virtual-network operators (MVNOs) wholesale access to their infrastructure. Those are smaller companies that don’t own wireless networks but pay bigger companies for the right to use theirs, re-selling that access under their own brands.

Trudeau himself has acknowledged telecom services in Canada are costly and has vowed to do something about it.

“We recognize that Canadians shouldn’t be paying more for their already very expensive internet and communication services and that’s something that we will take into account as we move forward to ensure that the system is fair for everyone,” Trudeau said last Monday at the close of the G7 summit in France, when asked about the possibility of taxing digital services.

The Conservatives under leader Andrew Scheer have criticized the Liberals for being ineffective on the subject, noting the prime minister has had plenty of time to reduce end user rates since coming to power in 2015.

“Justin Trudeau and the Liberals have been in power for four years, and have done nothing to make life more affordable for Canadian families,” Scheer’s press secretary Daniel Schow said in an emailed statement.

The Tories, however, have not laid out their own plan to deal with a rising household cost, choosing instead to wait until the campaign begins.

“We will have more to say about our plan to make life more affordable and to help Canadian families get ahead in the coming weeks,” Schow said.

The Green party has also pledged to “mandate affordable cellphone plans,” without providing specifics.

Industry players warn that attempts at rate-fixing could result in reduced investment in critical infrastructure, particularly as Canada heads toward development of 5G networks across the country.

Canada’s telecom industry group, the Canadian Wireless Telecommunications Association (CWTA), argues that the high costs Canadians pay for services have been necessary to help build one of the fastest, most reliable cellphone and internet infrastructures in the world.

“Our members want to continue to build out to ensure that more Canadians get connected, and that we have world-class networks and that we are ready for 5G, because the 5G economy is going to be the future for those countries that are able to get there and deliver those networks,” CWTA president Robert Ghiz — a former premier of Prince Edward Island — said in an interview.

“That will lead to GDP growth and will make sure that Canada can remain competitive.”

If rates for internet, cellphone and other telecom services are a political football, that’s the fault of the service providers, says consumer-rights advocate John Lawford of the Public Interest Advocacy Centre.

“The companies have done nothing to take themselves off the radar of the political parties,” said Lawford.

“Low-income Canadians are spending, according to the (Canadian Radio-television and Telecommunications Commission) and Statistics Canada, about 10 per cent of their income on communications services,” he added.

“That’s double what it should be.”

The Trump administration’s latest round of tariffs on Chinese imports took effect early Sunday, potentially raising prices Americans pay for some clothes, shoes, sporting goods and other consumer goods in advance of the holiday shopping season.

The 15% taxes apply to about $112 billion of Chinese imports. All told, more than two-thirds of the consumer goods the United States imports from China now face higher taxes. The administration had largely avoided hitting consumer items in its earlier rounds of tariff hikes.

But with prices of many retail goods now likely to rise, the administration’s move threatens the U.S. economy’s main driver: Consumer spending. As businesses pull back on investment spending and exports slow in the face of weak global growth, American shoppers have been a key bright spot for the economy.

As a result of Trump’s higher tariffs, many U.S. companies have warned that they will be forced to pass on to their customers the higher prices they will pay on Chinese imports. Some businesses, though, may decide in the end to absorb the higher costs rather than raise prices for their customers.

After Sunday’s tariff hike, 87% of textiles and clothing from China and 52% of shoes will be subject to import taxes.

On Dec. 15, the administration is scheduled to impose a second round of 15% tariffs — this time on roughly $160 billion of imports. If those duties take effect, virtually all goods imported from China will be covered.

The Trump administration has been locked in a trade war with China for more than a year, spurred by its assertion that China steals U.S. trade secrets and unfairly subsidizes its own companies in its drive to overtake the United States in such high-tech industries as artificial intelligence and electric cars.

To try to force Beijing to reform its trade practices, the Trump administration has imposed import taxes on billions of dollars’ worth of Chinese imports, and China has retaliated with tariffs on U.S. exports.

The president has insisted that China itself pays the tariffs. But in fact, economic research has concluded that the costs of the duties fall on U.S. businesses and consumers. Trump had indirectly acknowledged the tariffs’ impact by delaying some of the duties until Dec. 15, after holiday goods are already on store shelves.

A study by J.P. Morgan found that Trump’s tariffs will cost the average U.S. household $1,000 a year. That study was done before Trump raised the Sept. 1 and Dec. 15 tariffs to 15% from 10%.

The president has also announced that existing 25% tariffs on a separate group of $250 billion of Chinese imports will increase to 30% on Oct. 1.

That cost could weaken an already slowing U.S. economy. Though consumer spending grew last quarter at its fastest pace in five years, the overall economy expanded at just a modest 2% annual rate, down from a 3.1% rate in the first three months of the year.

The economy is widely expected to slow further in the months ahead as income growth slows, businesses delay expansions and higher prices from tariffs depress consumer spending. Companies have already reduced investment spending, and exports have dropped against a backdrop of slower global growth.

Saskatchewan says the Supreme Court of Canada has denied the province’s request to delay its appeal hearing over the carbon tax.

The province says the Supreme Court recently issued an order stating the hearing remain tentatively set for Jan.14.

The government had asked for more time and expected a delay could mean a hearing next spring.

It argued a delay would allow for better co-ordination of challenges coming from other provinces such as Ontario.

Ottawa opposed a delay and suggested the hearing should take place in a timely manner to provide certainty for households and businesses.

Meanwhile, a provincial spokesman says Saskatchewan respects Prince Edward Island’s decision to withdraw from the case.

Before any appeal hearing, Canadians will vote in October’s federal election. Conservative Party Leader Andrew Scheer is campaigning on a promise to scrap the carbon tax if his party is elected and he becomes prime minister.

A spokeswoman for federal Environment Minister Catherine McKenna says politicians should stop wasting taxpayer dollars to fight climate action in court.

“A price on pollution is one of the most effective and affordable tools that we have to tackle climate change, and one that will leave the vast majority of families better off,” press secretary Sabrina Kim said in an emailed statement Friday.

Innovators increasingly likely to transfer or sell intellectual property to foreign entities

Despite having the right conditions for innovation — from educated workers to strong research centres — many Canadian-invented patents are being snapped up by foreign firms rather than being developed by Canadian ones, a new study says.  

The report published by the Institute for Research on Public Policy says Canadians are increasingly likely to transfer or sell their intellectual property to foreign entities, especially with deep-pocketed American companies keen to invest in innovation.

“Canadians are actually pretty good innovators — they’re investing quite a bit in innovation and we have lots of people who are smart,” said Aidan Hollis, an economist at the University of Calgary, who co-authored the report with Nancy Gallini of the Vancouver School of Economics at the University of British Columbia.

“They do the innovations. They are listed on the patent. And then the patent is immediately assigned to the foreign company for which they work, or else, if it’s a Canadian company, often the Canadian company will end up selling the innovation with the patent. That’s sort of the core of the issue.”

Patent ownership is important for Canadian innovators who want to commercialize their inventions and scale them up, the authors say. It helps them obtain financing, fend off rivals and offers protection from patent trolls.

Yet, in tracking U.S. patents with at least one Canadian inventor over a 20-year period, the study found the proportion of Canadian-invented patents transferred to foreign firms on the date of issue jumped to 45 percent from 18 percent. 

“And of the patents that are assigned to Canadian residents, a significant proportion are subsequently sold to foreign entities,” says the report.

 U.S. companies are investing lots of money in innovation, Hollis said.

“They’re putting … branch plants here in Canada and hiring Canadian workers, who then basically do lots of innovative work,” he said. “And then the intellectual property rights and the ability to commercialize and monetize that innovation, it’s handed over to the foreign corporation.“

Though this “may be a cause for concern,” the study says investments in Canada by foreign subsidiaries can produce long-term benefits for Canadians, including development of scientific infra­structure.

Strengthening intellectual property laws isn’t likely to have much impact on scaling up activity in Canada, the study says. 

“More important to inventors is the ability to obtain and retain ownership of inter­national patents in order to operate in global markets,” it says.

Policies that improve awareness of the value of patent ownership, and make it easier and less expensive to access global markets, could make a difference.

Though the study calls a federal strategy aimed at promoting better management of intellectual property “promising,” it says further policies and incentives supporting patent retention are needed.