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politics briefing

Bank of Canada Governor Stephen Poloz listens to remarks after addressing the Canadian Club of Toronto on Dec. 14, 2017.Chris Young/The Canadian Press

Good morning,

The Bank of Canada is set to make its first interest rate decision of 2018 later today. Many analysts are expecting a hike in the central bank's benchmark rate, which would be the third increase in six months. BoC Governor Stephen Poloz began unwinding years of super-low interest rates, which came about after the Great Recession, last year as the economy was firing on all cylinders. In 2017, Canada's GDP led the G7 countries with 3-per-cent growth, and our economy saw 420,000 jobs added, pushing Canada to its lowest unemployment rate in more than 40 years in December. An increase in the Bank's overnight rate would likely increase borrowing costs for individuals but may also end up boosting the loonie, which would increase Canadians' purchasing power while decreasing exports. Although the central bank's decision will give insight on where it thinks the economy is heading in 2018, what might be even more revelatory is the Monetary Policy report, which also comes out today. All signs point, however, to the Bank of Canada moving to prevent the economy from overheating by increasing interest rates, a year ahead of a federal election.

This is the daily Politics Briefing newsletter, written by Chris Hannay in Ottawa, Mayaz Alam in Toronto and James Keller in Vancouver. If you're reading this on the web or someone forwarded this email newsletter to you, you can sign up for Politics Briefing and all Globe newsletters here. Have any feedback? Let us know what you think.

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TODAY'S HEADLINES

U.S. Secretary of State Rex Tillerson says North Korea needs to stop its threatening behaviour before talks can begin to defuse nuclear tensions on the Korean peninsula. But nonetheless, Mr. Tillerson says it's "time to talk." Mr. Tillerson says the United States will never accept North Korea as a nuclear power, and he pushed for rigorous enforcement of sanctions to pressure the regime. He was among foreign ministers from the U.S., Canada, South Korea and Japan who were in Vancouver yesterday for a one-day summit on North Korea. China and Russia were not invited and condemned the summit as meaningless.

The existing sanctions against North Korea have also put tremendous pressure on humanitarian groups, who have encountered a litany of problems getting gear and aide supplies into the country.

The federal Liberals will be announcing a new watchdog position today that will be in charge of corporate social responsibility. The ombudsperson will be responsible for overseeing how Canadian companies respect human rights abroad.

Ottawa is facing pressure to block a proposed $1.5-billion acquisition of Aecon Group Inc. by a state-controlled Chinese firm.  Canada's largest construction companies — Aecon's competitors — argue China Communications Construction Co. Ltd. has a poor safety and corruption record, and can't be trusted to work on sensitive projects. The final regulatory hurdle for the sale is approval from the federal government under the Investment Canada Act.

Former White House chief strategist Steve Bannon has been subpoenaed by Special Counsel Robert Mueller to testify on the probe into collusion between the Trump campaign and Russia, The New York Times reports.

Conservative Foreign Affairs Critic Erin O'Toole is asking for more clarity on the deals struck by RT, the Kremlin-run news channel that's part of Russia's "propaganda machine," which pay Canadian TV providers for distribution. "It's something we need to look at. What mandate should it be? Should it be under the regulator for content, or should it be something that's more oversight on a security basis?" Mr. O'Toole said. The Globe's Susan Krashinsky Robertson reported last month that RT pays TV providers to be included in some cable and satellite packages.

Longtime Parti Québécois members Alexandre Cloutier, Nicole Leger and Agnes Maltais say they won't be seeking re-election Jean-François Lisée, the leader of the party, says he's not worried ahead of a provincial election later this year that threatens to diminish the PQ's standing amid the waning political saliency of the sovereignty question in Quebec politics.

British Columbia's Premier John Horgan is ruling out a ban on foreign ownership in the real estate market, as the NDP government prepares to unveil its plans to curb speculation next month. The BC Greens, who are supporting the NDP in the legislature, have called on the province to follow New Zealand's decision to ban foreigners from buying existing residential homes.

B.C.'s NDP government cancelled a major conference on the liquefied natural gas industry shortly after taking power. The revelation comes as Mr. Horgan prepares to leave on a trade mission to Asia, in part to drum up potential LNG business for B.C.

Ontario Premier Kathleen Wynne is set to shuffle her cabinet today, months before a provincial election. Several senior positions will be affected as Ms. Wynne looks to remove ministers who have announced they will not seek re-election with MPPs she hopes will give her party an increased profile ahead of the vote.

The International Olympic Committee is in Calgary this week  as the city prepares for a vote later this month on whether to proceed with a bid for the 2026 Winter Games. The trip comes as the IOC revamps the bidding process to make it cheaper and more sustainable, amid growing speculation among potential host cities — few of which have shown interest in competing for the multibillion-dollar sporting event.

The comprehensive tax reform package passed in the U.S. late last year, which cuts the corporate tax rate to 21 per cent from 35 per cent,  threatens to blunt Canada's competitive edge. Here's how Bank of Montreal chief economist Douglas Porter described it: "At least on the surface, we've gone from having significantly lower tax corporate rates than the U.S. to having the same if not a little bit higher than the U.S. So one big potential attraction of investing in Canada has essentially been removed with a stroke of a pen."

The White House is arguing that the immigration system "jeopardizes" national security, releasing a 10-page report that highlights foreign-born residents who were convicted on terrorism-related charges.

Days after Hawaiians received an incorrect alert saying that a missile attack was imminent, Japan's public broadcaster NHK urged people to take shelter from a North Korean missile. Like with the situation in Hawaii, which was attributed to human error, there was no attack. NHK was able to correct the error within minutes.

U.S. President Donald Trump is in excellent overall health despite his diet and did "exceedingly well'" on a cognitive test, Navy doctor Ronny Jackson said after a checkup. The assessment of mental capabilities, on which Mr. Trump scored a perfect 30/30, was designed by neurologist Ziad Nasreddine, who immigrated to Canada from Lebanon. Dr. Nasreddine said the test is used to quickly determine if an individual has suffered light cognitive impairment and doesn't examine judgement or personality. He also said that he hopes the U.S. President takes an important lesson away from the test: that immigrants, and people from the Arab world, can make a positive contribution to American society.

Beer Canada is calling on the federal government to axe its plan to tie tax hikes on the alcoholic beverage to inflation.

John Ibbitson (The Globe and Mail) on a lonely Canada: "The Canadian government, in concert with what is left of the U.S. State Department, brought the old allies from the Korean War together in Vancouver on Tuesday, for no particularly good reason other than to remind North Korea that it has more to fear than the tweets of Donald Trump, and to remind the world that Canada remains among the last true defenders of the old global order. There is no way to disguise how much things have gone downhill in the past 12 months. A year ago, Prime Minister Justin Trudeau had powerful allies in the quest to preserve the Western alliance despite the arrival of a rogue U.S. president. Today, those allies are much weakened." (for subscribers)

Gary Mason (The Globe and Mail) on the Vancouver summit: "Mr. Trump's inability to follow even the simplest of scripts was always going to be a problem that threatened to undermine the value of anything accomplished at the international summit on North Korea in Vancouver on Tuesday, hosted by Canada and the United States. You have to be able to count on your partners in order to have a plan. Yet, Rex Tillerson, the U.S. Secretary of State, doesn't know from one day to the next what fresh global tempest his boss is going to touch off. But that was only one of the issues that was going to plague the Vancouver confab. Another was the list of invitees. Inexplicably, the event didn't include global powers Russia or China, North Korea's most influential neighbours. Instead, countries such as Greece, Belgium, Colombia and Luxembourg were asked to attend – as if any of them have the clout to help resolve the Korean conflict. The absence of China was particularly perplexing."

Samer Muscati and Audrey Macklin (The Globe and Mail) on Abdoul Abdi: "Prime Minister Trudeau was once the Liberal immigration critic. If he is serious that the rule of law (including adherence to international human rights law) and the principle of compassion should govern, Mr.Abdi should not be deported. He came to Canada as a child, he grew up in Canada and he is a product of Canada, including its broken foster care system."

Campbell Clark (The Globe and Mail) on carbon pricing: "It's not going to be so easy for Justin Trudeau's Liberal government to manage federal-provincial affairs in 2018. It's starting with a warning shot. The new federal carbon tax legislation doesn't just threaten consequences for naysayers, such as Saskatchewan, or serve as a flashpoint for a campaigning Jason Kenney in Alberta. It tightens the screws on friends in power, such as New Brunswick's Brian Gallant."

Globe and Mail Editorial Board on missile defence: "Spending billions to defend against a remote contingency may seem wasteful. On the other hand, conventional cost-benefit thinking wobbles here: In the event that Pyongyang did target Canada, it would be worth roughly all the money in the world to have a chance of protecting ourselves. That's why the Canadian government should find out what's on the table, and open discussions about joining the missile-defense program. For years, the Conservatives have been too gung-ho about this limited backup plan, and the NDP too squeamish. The Liberals, who have refused to stake out a coherent position either way, have a chance to be the party of sober, reasoned leadership on this issue. Of course, we must keep trying for a diplomatic solution to the North Korean crisis. But sometimes you have to conduct diplomacy while wearing a bulletproof vest."

Clifford Orwin (The Globe and Mail) on impeachment: "It seems that, for better or worse, Donald Trump is unimpeachable. This is not just because a Republican Congress is so unlikely to impeach a Republican President. It is also because of the constitutional stipulation that the only impeachable offences are 'high crimes and misdemeanours.'"

Lawrence Martin (The Globe and Mail) on Mike Pence: "being the moral opposite of the President – Mr. Pence refuses to dine with another woman unless his wife is present – has appeal in the party. With the Bible as his guide, he would restore respect – in the behavioural sense – for the office. He could help minimize losses. It might be like Gerald Ford in the wake of Richard Nixon. Mr. Ford lost the 1976 election to Jimmy Carter, but narrowly. Mr. Pence is by no means dense in being sycophantic while serving the mercurial Mr. Trump. He knows that if he offends him he could be dropped off the Trump ticket for the 2020 campaign. Better to curry favour now and hope that by 2020, there is no Trump ticket."

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President Donald Trump’s former chief strategist Steve Bannon declines to comply with a subpoena ordering him to answer questions from a House intelligence panel about his time at the White House as part of its investigation into allegations of Russian interference in the U.S. election.

Reuters

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