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Day: November 21, 2022

Why is Ottawa still rationing foreign landings at our airports?

Opening Canada’s skies would help cross-border trade, tourism, investment and knowledge flows

Canada’s national men’s soccer team qualifying for the upcoming World Cup in Qatar was a huge achievement, given that we haven’t qualified for a World Cup since 1986. Although this is a great time in Canada’s sporting history, it won’t actually be easy for fans to go to Qatar to support their team in person, primarily because of outdated regulations that close our skies to international airline competition.

Isn’t it strange in the 21st century that the number of flights arriving in Canada from most foreign countries is still entirely determined by the federal government. That number, which appears to be picked arbitrarily depending on the country in question, isn’t based on consumer demand. In fact, airlines and airports play a role in allocating how many flights can arrive from a particular country only if Canada has an “open skies” agreement with the country. At the moment, Qatar is only permitted to land four flights in Canada per week. That’s obviously not ideal given the (albeit temporary) increase in demand for flights to and from Qatar.

This same arbitrary flight allocation applies to many other countries, among them many popular destinations for tourism and commerce. For example, Dubai in the United Arab Emirates is also hard to get to and from. The UAE is only allowed seven arrivals per week in Canada for both Emirates and Etihad Airlines.

If Canada were to open our skies and accept all the incoming flights the Canadian market could support, Air Canada wouldn’t be Canadian travelers’ only flight option and the resulting increase in competition very likely would bring ticket prices down.

Opening Canada’s skies would also help diversify where foreign flights land. The UAE has its national carriers primarily fly into Toronto, because with only seven Canadian landings permitted per week, it makes sense to prioritize Pearson over the alternatives. But if that arbitrary limit were removed, flights could both arrive and depart from other Canadian cities where market demand is strong enough, though not as strong as in Toronto.

These limitations are in large part why Canada does not rank very well on economy-adjusted air-connectivity. According to the International Air Transport Association (IATA), we ranked 32nd globally, based on pre-pandemic 2019 figures. In fact, despite having world class cities like Toronto, Montreal, and Vancouver, we have no cities in the air-connectivity top 20.

Changing how we approach international carriers should be a no-brainer given the immense consumer benefit it would bring. And open-skies isn’t even that radical a proposal: it would mean treating all countries and their national carriers the same way we already treat 23 countries (soon to be 24 with the addition of India) and the member-states of the European Union. For those countries, which include 10 in the Caribbean, the open-skies agreement allows any number of carriers to operate both direct and indirect services between Canada and another country, with airlines choosing the routes they serve, the frequency of their service and the prices of flights, without any restrictions. Simply put, for those countries we let the market and consumer demand decide the frequency of flights, not the federal government. But if a market-based approach is good enough for 24 countries plus Europe, why isn’t it good enough for all countries? We should let the market decide where Canadians want to travel to, how often and with what carrier.

But opening our skies wouldn’t just be a win for Canadian consumers. Growing air connectivity with the world has economic benefits, too. According to IATA, the historic correlation is that a 10 per cent rise in connectivity relative to a country’s GDP is associated with a boost in labour productivity of 0.07 per cent. Not great thrust but certainly worth having.

Opening our skies would help cross-border trade, tourism, investment and knowledge flows. As we all get back to traveling in a post-pandemic world, now would be a good time for Canada to modernize its rules and open our skies for good.

Originally published here

LE PROTECTIONNISME N’AIDERA PAS LE SECTEUR AUTOMOBILE

Les guerres commerciales lancées par Trump ont montré que le protectionnisme n’entraîne aucun avantage économique palpable. Il ne sera pas plus utile pour le secteur de l’automobile européen. 

Dans un précédent article, en janvier, je vous avais parlé de la « souveraineté numérique » telle qu’expliquée par Emmanuel Macron. En lisant cet article, vous auriez pu penser que je n’avais que très peu relié son concept de souveraineté stratégique au protectionnisme (même si d’autres exemples suggèrent que Macron est effectivement protectionniste). Si vous aviez encore des doutes, le président français vient de les dissiper.

Dans ses récentes déclarations, M. Macron appelle à la « souveraineté » européenne dans le secteur automobile. Son problème : les sociétés de location de voitures en Europe n’achètent pas suffisamment (à son goût) de modèles européens. Les constructeurs automobiles américains et les fabricants chinois sont plus performants que le marché européen, ce qui chagrine le dirigeant français.

Qui est protégé ?

Il a expliqué sa position sur le plateau de France 2 :

« Il nous faut un Buy European Act comme les Américains ; il faut réserver [nos subventions] à nos industriels européens. […] Vous avez la Chine qui protège son industrie, les Etats-Unis qui protègent leur industrie et l’Europe qui est une maison ouverte. »

En 2017, Macron avait fait pression pour mettre en place ce qu’il a appelé le « Buy European Act » (loi pour acheter européen) pour les marchés publics, qui s’appliquerait aux entreprises ayant plus de la moitié de leur production au sein du bloc européen. Mais il a été contraint d’abandonner l’idée face à l’opposition de Bruxelles.

Je viens d’un pays, le Luxembourg, qui ne produit pas et n’a jamais produit de voitures ; alors peut-être suis-je incapable de comprendre l’attachement nationaliste à une marque de voiture locale. Mais, ce qui est le plus affligeant, c’est de considérer que l’Europe devrait s’engager dans une autre guerre commerciale avec le reste du monde pour des voitures.

Si des pays comme les Etats-Unis ou la Chine sont soupçonnés de favoriser injustement leurs industries, alors la France doit s’en saisir au niveau de l’OMC, et non essayer d’imiter leurs politiques au sein de l’Union européenne.

Le protectionnisme nous est souvent vendu comme un devoir de protéger nos industries, mais, en pratique, il nuit fortement aux consommateurs. Nous avons besoin de choix sur le marché pour prendre des décisions éclairées pour notre confort et notre porte-monnaie. Réduire le nombre de concurrents ne fera qu’empirer les choses. La notion de souveraineté européenne d’Emmanuel Macron devrait viser à créer un environnement commercial favorable à l’innovation, et non à servir de tremplin à une nouvelle guerre commerciale.

L’Europe a connu de nombreux problèmes ces dernières années, mais l’un des moins visibles, et pourtant important, est celui de la pénurie de puces. Lorsque les chaînes d’approvisionnement sont perturbées, l’industrie est désorganisée. Cela a été le cas en Europe et aux Etats-Unis.

Le problème de l’électrique

L’Union européenne ayant l’intention d’interdire la vente de nouvelles voitures à essence d’ici 2030, d’énormes opportunités de marché vont se présenter pour les vendeurs du monde entier ; car l’Europe est à peine capable de répondre à la demande de ses propres marchés. Certains prétendront également que l’Europe sous-estime la valeur des véhicules à hydrogène dans cette équation.

En outre, l’infrastructure de recharge nécessaire pour faire fonctionner les voitures électriques n’existe tout simplement pas. Si des pays comme les Pays-Bas fournissent de nombreuses stations de recharge électrique, d’autres sont à la traîne, ce qui risque de rendre le marché de l’occasion pour les voitures à essence plus important dans les prochaines années qu’il ne l’a jamais été auparavant.

Schmidt Automotive Research prévoit que les ventes de véhicules électriques à batterie bondiront cette année dans l’Europe de l’Ouest, pour atteindre 1 575 000 unités, soit une part de marché de 14%, contre 11% l’an dernier. Selon ces mêmes estimations, cette proportion atteindrait 14,5% en 2023 et 15% en 2024, soit 1 950 000 véhicules.

Bernstein Research prévoit de son côté que toutes les ventes électriques en Europe représenteront 14% du marché cette année, 27% en 2025 et 50,5 % en 2030.

L’accélération actuelle des ventes de véhicules électriques à faible consommation est le fait d’adeptes précoces et aisés, convaincus de l’importance de l’énergie électrique et de tout ce qu’elle peut apporter à la planète. Ils achèteront probablement une Tesla, une Volkswagen, une Hyundai ou une Kia électrique sans trop y penser, malgré des prix élevés. Cela ne sera pas le cas lorsque des acheteurs réguliers, aux revenus moyens, voudront acheter une nouvelle voiture.

Le protectionnisme ne résoudra guère ce problème ; il ne fait que s’ajouter à la grande ironie de la situation. D’un côté, le gouvernement interdit votre véhicule à essence et, de l’autre, il rend l’achat d’une voiture électrique plus coûteux pour vous, puisqu’il a l’intention d’appliquer des tarifs douaniers.

Les politiques de Donald Trump ont montré qu’une guerre commerciale mondiale n’entraîne aucun avantage économique palpable pour l’un ou l’autre camp. En fait, elle a rendu le monde occidental plus vulnérable à l’influence des intérêts économiques chinois. Faciliter la création de l’industrie manufacturière en Europe devrait être le facteur clé pour les décideurs à Bruxelles et à Paris, mais ils sont occupés à marquer des points politiques à bas prix par une réflexion économique à court terme.

Originally published here

Sharing economy: we need to rethink work

The Consumer Choice Center has launched a new and improved version of its Sharing Economy Index, ranking 60 cities around the world by their openness to innovation in the sector.

The index is primarily a guide for consumers, pointing them toward the most (and least) innovation-friendly cities. This way, they can take advantage of the best the sharing economy has to offer.

At the same time, it teaches regulators an important lesson about the sharing economy. The sector is a 21st-century marvel, from the way the company is set up to workers’ personal schedules. By contrast, efforts to impose one-size-fits-all legislation on the industry are stuck in the past and will only leave everyone worse off.

For centuries now, the usual workplace was organized around a clear hierarchy, where some completed a set number of known chores and others watched over them to make sure the job got done.

The traditional factory, with its manual laborers and overseers, fits the same description. As tasks in the economy multiplied and the world became richer, factories often gave way to offices and worker overalls became shirts and ties. The underlying structure of the workplace, nonetheless, remained the same.

The sharing economy blows this old model out of the water. Gone is the hierarchy of the factory assembly line or office arrangement, replaced by a network designed to match independent buyers and sellers in ways that benefit both parties. Companies like Airbnb, Uber, and Fiverr are platforms for private individuals to supply goods or services to those in need, with no controlling manager or bureaucratic system getting in the way of exchanges.

Such decentralization doesn’t stop at the structure that companies take. It extends all the way to the everyday tasks of those working in the gig economy. As noted in the Consumer Choice Center’s report, around 79% of independent laborers in the US and 80% of those in the EU cited the ability to produce their own schedule as the primary reason why they chose the position in the first place.

Thanks to its open-ended nature, the sharing economy is able to bounce back from serious challenges. If one part of the network is disrupted, another can take its place, with the larger web always surviving. For instance, Uber has been able to remain active in Ukraine during the Russian invasion, having to move 60 tons of supplies from Romania into Ukraine.

Regulators do not share the same positive picture of the gig industry. Instead, they want workers to enjoy the legal protection and benefits of being a regular salaried worker in a standard company. The same policymakers believe an employee must be able to demand unionization, healthcare benefits, or compensation for negligence and that platform owners should be forced to comply with these demands.

Were regulators to have their way with the sharing economy, however, decentralization would be no more. Suggested legislation marks the return to the old model of factory and office. The US Protecting the Right to Organize Act and the European Commission’s 2021 platform work proposal relegates gig workers to the status of permanent employees and standard managers based on a number of familiar criteria: work and safety, collective bargaining, and a required number of working hours per week.

The consequences would be awful all around. Far from legal certainty, some gig workers would be left jobless altogether, as they are unable to work on a 9 to 5 schedule. This hits vulnerable groups the hardest since they are most reliant on flexible work environments.

Consumers will suffer too. With more and more regulations, services become costlier and harder to acquire. Once layoffs intensify and companies go bankrupt, the goods and services that customers have grown to rely on may not be available anymore.

It’s advisable for policymakers to look toward the future rather than the past. Recognize and foster the strengths of the sharing economy by getting out of the way and letting workers, consumers, and the firms themselves decide the fate of the sharing economy.

Originally published here

What the collapse of FTX means for crypto in Europe

Just a few days ago, FTX was the second-largest crypto exchange in the world with a significant user base across the European Union. Now, after revelations of the company’s finances and opaque dealings by CEO Sam Bankman-Fried, the company faces a collapse causing contagion across the cryptocurrency economy. This will likely have a large impact on how crypto is both viewed and regulated here in Europe.

Bankman-Fried, the Bahamas-based American billionaire entrepreneur, was a primary protagonist in the folding of crypto platforms and hedge funds like Celsius Network, Voyager, and Three Arrows Capital earlier this year, offering nearly $1 billion to buy or bail out firms, prop up those facing insolvency and eye acquisitions worth hundreds of millions.

Much of this was carried out by FTX, but also its sister hedge fund Alameda Research, owned by Bankman-Fried and also headquartered in the Caribbean, whose balance sheets were likely propped up with FTX customer funds.

In September, FTX’s European office, called FTX EU and headquartered in Switzerland, won approval from EU member state Crypus to operate as an investment firm following a local acquisition.

In a press release, Bankman-Fried said the license was “an important step in achieving our goal of becoming one of the most regulated exchanges in the world,” and was the final step to offering its crypto services to all citizens of the European Economic Area.

At least in the United States, Bankman-Fried used both his money and influence to have a say in how cryptocurrency regulation. He revealed he was willing to spend up to $1 billionto fund the Democratic Party in the 2024 election. That plan has now evaporated.

Whether his influence was as powerful or significant in the EU remains to be seen, but the broader lesson hinges on what the collapse means for consumers and the future of crypto regulation in Europe, which is currently being shaped.

German MEP Stefan Berger, a leader negotiator on the Markets in Crypto-Assets framework many European officials hope will become a global standard on cryptocurrency regulation, tweeted that this scenario would effectively have been addressed by MiCA. “MiCA is the bulwark against Lehman Brothers moments such as the FTX case,” he told the crypto news site The Block.

And while that claim is a big one, it should be noted that MiCA rules, as they stand, have the strongest requirements for tokens such as stablecoins and their reserves — cryptocurrencies pegged to the Euro or US dollar — rather than exchanges. It also contains more provisions on financial surveillance and stopping “money laundering” (which appears 16 times in the document) than segregation of customer funds.

The latest available text on MiCA requires that “Crypto Asset Service Providers” (exchanges) have “sufficient capacity to ensure orderly trading” and “shall segregate holdings on behalf of their clients from their own holdings”

That remains the most pointed part of the publicly available text when it comes to exchange reserves and segregation of funds, but the events of the last week could continue to change the text before it is formally introduced next year.

For those of us with a significant interest in Bitcoin and other cryptocurrencies — protocols designed to be decentralized — it was always understood that the future of cryptographic digital assets relies on people learning about self-custody, holding their own cryptocurrencies in a wallet protected with private keys. That is what sets cryptocurrencies like Bitcoin apart from the traditional banking system. That, above any European legislation or good-natured incentive, is what will protect consumers.

With so much crypto value tied up on exchanges and lending platforms rather than people’s own wallets, there are hundreds of billions of euros at risk for consumers. As we now see with FTX’s collapse, it only takes one liquidity event to send shockwaves.

It would benefit us all if rules help bring regulatory clarity, keep shady actors at bay and provide financial transparency. If we want to craft the future of decentralized digital money, it will mean smarter rules that punish bad actors while promoting financial sovereignty. That’s what consumers deserve.

Originally published here

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