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Greenpeace activists hold a protest demanding an end to deep-sea mining in Prague, Czech Republic.
Jamaica hosts deep-sea mining talks
Who lives in a pineapple under the sea?
Nauru wants to find out. The tiny Pacific island nation is trying to convince the global community to grant it permission to mine precious metals hidden deep beneath the oceans.
Starting on Monday, representatives from 168 countries will gather in the Jamaican capital of Kingston for at least three weeks of UN-hosted talks about whether to allow deep-sea mining in international waters. The meeting was triggered by the expiration of a two-year moratorium on the practice after Nauru filed in 2021 the first-ever application for a commercial license to harvest rocks containing metals like cobalt or copper.
There are two fiercely opposed geopolitical camps. On one side, France, Germany, and Chile are leading the charge for a pause on mining the seafloor until scientists better understand the risk to the marine ecosystem. On the other, China, Russia, South Korea and (!) Norway believe that deep-sea mining is fair game to find metals to power green tech.
Environmentalists fear that anything short of a new ban will cause irreparable damage to a part of the planet that's been less explored than the moon. But pro-mining countries argue that the world can no longer rely exclusively on unstable sources like the Democratic Republic of Congo, which produces 70% of the world's cobalt. And of course, China is keen to further dominate the global supply of rare-earth minerals.
What do you think? Let us know here.Canadian Prime Minister Justin Trudeau arrives at Hiroshima Airport in Japan.
Ahead of G-7, Canada seeks cooperation in Asia
Trudeau landed in Hiroshima on Thursday to discuss global security, economic resilience, climate change, and energy with the other G-7 leaders. As in South Korea, Canada’s top business priority is likely to be seeking markets for critical minerals.
While Trudeau is there, he may seek a quiet word with allies about AUKUS – the Indo-Pacific security alliance between Australia, the United Kingdom, and the United States — which Canada appears to want to be part of after all.
Trudeau will see Joe Biden in Hiroshima, but the U.S. president is expected to fly home early in an effort to reach a debt-ceiling deal. The wrangling at home forced Biden to cancel a planned trip this week to Australia and Papua New Guinea, where he was to meet with the other leaders of the Quad from Australia, Japan, and India. The Quad aims to counter China's rising influence in the Indo-Pacific, so abruptly bowing out sent mixed messages about US priorities in the Asia-Pacific – and, since China is no fan of the Quad, likely pleased Xi Jinping. In fact, the Sydney Morning Herald declared the last-minute cancellation a gift to Beijing.A Canadian soldier holds a flag as they wait for the arrival of PM Justin Trudeau along with NATO Secretary-General Jens Stoltenberg in Adazi, Latvia.
What We’re Watching: NATO (still) wants Canada to pay up, critical mineral gold rush, a tale of two banks
Canada is a NATO laggard – but it’s far from alone
The aging defense league is finding a new raison d’etre battling Russian aggression in Ukraine. But Canada still falls short of the 2% GDP military spending goal that NATO Secretary General Jens Stoltenberg recently said is set “not as a ceiling but a floor, a minimum, that we should all meet.”
A recent NATO report estimates that Canada’s share of defense spending declined against its GDP to 1.27% in 2022, down from 1.32% in 2021 and well shy of the 2% target. Several members spend less than the target, but Canada falls toward the mid-to-bottom of that list.
In 2022, the US topped the list at 3.47% of GDP. The US routinely nudges Canada to spend more on defense. Last month, its ambassador to Canada said he was “hopeful” the country would hit the NATO target.
Canada has no plan to reach the 2% target, and its latest budget is still light on defense spending. But the government does tout that it has the sixth-largest NATO defense budget and is a top contributor to the alliance’s common fund. Canada also spent billions on new fighter jets and is making investments in northern and continental defense. NATO doesn’t penalize states that don’t hit the 2% target – and it’s hard to imagine Canada getting thrown out of the club, so all it can do is name and shame in the hope that Canada starts to pull its weight.
Betting on critical minerals
If you don’t know the term “critical minerals,” it’s time to learn. You’re going to hear it a lot in the years ahead. These are minerals of strategic value to a country’s economic health and security. Both Canada and the US use that definition, but the Canucks add a flourish, referring to them as “the building blocks for the future of our green and digital economy.”
They include copper, graphite, cobalt, lithium, and several others necessary for building and operating a contemporary economy. They power everything, from transportation and energy to digital infrastructure and the so-called “green economy.”
Canada is full of critical minerals. Several provinces and territories are mined for cobalt and copper. Saskatchewan is home to uranium and potash, there’s graphite in Ontario and Quebec, and fluorspar in Newfoundland and Labrador. Experts say the capital-intensive mining industry needs and expects (!) subsidies to extract them. The government’s critical mineral strategy will offer some. PM Trudeau’s March budget included an investment tax credit for critical mineral exploration and investor subsidies.
In the US, meanwhile, the Inflation Reduction Act includes critical mineral measures, such as billions in federal loan money, as well as its own tax credits.
The need for critical minerals is booming on both sides of the border – as is trade. In 2020, mineral trade between the US and Canada hit nearly $96 billion, and by 2030, global mineral trade is estimated to hit $567 billion.
Will Canada and the US hit a recession?
Both the Bank of Canada and the Fed are prepped, but the Northern neighbor is more optimistic than the Southern one. On Wednesday, the Bank of Canada held its interest rate at 4.5%, a move it had signaled for some time. The bank says a soft landing has become more likely as it expects Canada to avoid a recession over the next three years while inflation slows and moves toward the 2% target — though it is still a long way off. The upshot? The economy may be edging back toward a pre-pandemic “normal.” But, warns Bank Governor Tiff Macklem, the current restrictive monetary policy may need to stay in place a while longer. Still, by the gloomy climate standards, that’s pretty darn optimistic.
The US Federal Reserve, meanwhile, is grouchy. It hiked its rate from 4.75% to 5% in March, its ninth consecutive increase. On Wednesday, the US Bureau of Labor Statistics released a report showing that inflation fell to 5%, with core inflation at 5.6%. That’s good news, but it’s unlikely to change the Fed’s course, and another rate hike is expected in May.
So, watch your banks and your dollars for signs of recession. And even if Canada is optimistic, the US pessimism will likely put downward pressure on the Canadian dollar, particularly if Canadian rates remain steady. A weaker Canadian dollar means more expensive imports from the US. But the loonie notably held its own on Wednesday.
What does it all mean in the big picture? Cooling inflation rates in the US, Canada, and Europe offer hope that the rate-hike cycle could soon end. But the UK saw an unexpected inflation jump in mid-March, a reminder to temper — or deflate – expectations.
Podcast: How healthy is the US-Canada relationship?
Listen: On the GZERO World podcast, Ian Bremmer delves into the current status of the US-Canada relationship. In a nutshell: it's going well — definitely a lot better than under Donald Trump — but not all smooth sailing.
Ian interviews the ambassadors of both countries, David Cohen (US Ambassador to Canada) and Kirsten Hillman (Canadian Ambassador to the US), about what brings the two countries together and the challenges that trigger political division. He also chats with Anita Anand, Canada's defense minister, about a variety of national security challenges, from Chinese spy balloons to ... TikTok.
Subscribe to the GZERO World Podcast on Apple Podcasts, Spotify, Stitcher, or your preferred podcast platform, to receive new episodes as soon as they're published.- Will US-Canada border deal mean riskier future for migrants? ›
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- What the US and Canada really want from each other - GZERO Media ›
Canada has lower risk appetite than the US, says think tank chief
At the US-Canada Summit in Toronto, GZERO's Tony Maciulis asks Chris Sands, head of the Wilson Center's Canada Institute, for his biggest takeaway from the recent meeting between US President Joe Biden and Canadian PM Justin Trudeau.
Sands also has some thoughts on the most pressing issues in the US-Canada relationship, especially migration. And he offers his take on why one-third of Canadians now think that bilateral ties are getting worse.
Finally, do Canadians care about former US President Donald Trump getting indicted?
For more, sign up for GZERO North, the new weekly newsletter that gives you an insider’s guide to the world’s most important and under-covered trading relationship, US and Canada.
US-Canada can and will extract critical minerals sustainably, says top US diplomat
Ever heard of critical minerals? Well, there's a reason they are called that way — and it has a lot to do with clean energy.
At the US-Canada summit in Toronto, GZERO's Tony Maciulis asks Jose Fernandez, US Undersecretary of State for Economic Growth, Energy and the Environment, about why these minerals are such a big deal and what the US and Canada are doing to secure supply.
Fernandez also shares his views on how critical minerals can be mined sustainably, and more broadly on how the two countries can work together to tackle this and other issues relevant to the fight against climate change.
For more, sign up for GZERO North, the new weekly newsletter that gives you an insider’s guide to the world’s most important and under-covered trading relationship, US and Canada.
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